UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
----------
(X) QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
SEPTEMBER 30, 1997
------------------
OR
( ) TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ------
to -------
COMMISSION FILE NO.
1-6479-1
--------------------
OVERSEAS SHIPHOLDING GROUP, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-2637623
- ------------------------------- --------------------
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication No.)
1114 Avenue of the Americas, New York, New York 10036
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (212) 869-1222
-----------------
No Change
- ----------------------------------------------------------------
Former name, former address and former fiscal year, if
changed since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
--- ---
Common Shares outstanding as of November 10, 1997 - 36,788,280
<PAGE>
<TABLE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
------------------------------------------------
<CAPTION>
SEPTEMBER DECEMBER
30, 1997 31, 1996 (A)
-------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
------
Current Assets:
- --------------
Cash, including interest-bearing
deposits of $105,295,000 and
$103,338,000 $ 110,337,000 $ 109,120,000
Receivables 33,648,000 31,197,000
Prepaid expenses 25,355,000 28,227,000
-------------- --------------
Total Current Assets 169,340,000 168,544,000
Investments in Marketable Securities 26,504,000 15,337,000
Capital Construction Fund 174,619,000 145,350,000
Vessels, at cost, less accumulated
depreciation of $443,382,000
and $555,846,000 and, in 1997,
Vessels Included in Disposal
Program, at estimated fair
value - Notes F and H 1,240,504,000 1,214,401,000
Vessels Under Capital Leases,
less accumulated amortization
of $110,870,000 and $104,963,000 73,509,000 79,416,000
Investment in Cruise Business -
Note B 160,407,000 239,255,000
Investments in Bulk Shipping Joint
Ventures - Note C 95,061,000 91,399,000
Other Assets 86,964,000 83,599,000
-------------- --------------
$2,026,908,000 $2,037,301,000
============== ==============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
<S> <C> <C>
Accounts payable $ 4,072,000 $ 4,878,000
Sundry liabilities and accrued
expenses 50,923,000 35,373,000
-------------- --------------
54,995,000 40,251,000
Current installments of long-term
debt - Note F 23,180,000 18,723,000
Current obligations under capital
leases 7,614,000 7,236,000
-------------- --------------
Total Current Liabilities 85,789,000 66,210,000
Advance Time Charter Revenues 4,402,000 7,694,000
Long-term Debt - Notes B and F 942,773,000 985,032,000
Obligations Under Capital Leases 104,032,000 108,443,000
Minority Interest 1,457,000
Deferred Federal Income Taxes
($98,839,000 and $94,803,000)
and Deferred Credits - Note E 104,855,000 99,027,000
Shareholders' Equity - Notes E and I:
Common Stock, par value $1 per share:
Authorized - 60,000,000 shares
Issued - 39,590,759 shares 39,591,000 39,591,000
Paid-in Additional Capital 96,099,000 93,725,000
Retained Earnings 685,949,000 687,981,000
-------------- --------------
821,639,000 821,297,000
Less - cost of Treasury Stock -
2,808,074 and 3,355,390 shares 41,853,000 49,210,000
-------------- --------------
779,786,000 772,087,000
Net unrealized gain/(loss) on
marketable securities 5,271,000 ( 2,649,000)
-------------- --------------
Total Shareholders' Equity 785,057,000 769,438,000
Other Comments - Note I
-------------- --------------
$2,026,908,000 $2,037,301,000
============== ==============
<FN>
(A) The balance sheet at December 31, 1996 has been derived from the
audited financial statements at that date.
(See Accompanying Notes)
</TABLE>
<PAGE>
<TABLE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND
SEPTEMBER 30, 1996
(UNAUDITED)
- ----------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- -------------------------
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 1997 30, 1996 30, 1997 30, 1996
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shipping Revenues:
Revenue from voyages $120,933,000 $104,141,000 $369,334,000 $342,894,000
Income attributable
to bulk shipping
joint ventures -
Note C 719,000 965,000 2,912,000 3,902,000
------------ ------------ ------------ ------------
121,652,000 105,106,000 372,246,000 346,796,000
------------ ------------ ------------ ------------
Shipping Expenses:
Vessel and voyage -
Note D 76,922,000 71,614,000 228,809,000 224,540,000
Depreciation of vessels
and amortization
of capital leases 20,771,000 17,595,000 60,472,000 53,047,000
Agency fees - Note D 8,793,000 8,363,000 26,591,000 25,232,000
General and
administrative 2,926,000 1,900,000 8,211,000 6,248,000
------------ ------------ ------------ ------------
109,412,000 99,472,000 324,083,000 309,067,000
------------ ------------ ------------ ------------
Income from Vessel
Operations 12,240,000 5,634,000 48,163,000 37,729,000
Equity in Results of
Cruise Business -
Note B 3,463,000 4,395,000 3,284,000 2,184,000
Other Income (net) -
Note G 12,023,000 4,888,000 31,599,000 22,826,000
------------ ------------ ------------ ------------
27,726,000 14,917,000 83,046,000 62,739,000
Interest Expense 21,475,000 18,184,000 62,858,000 51,961,000
------------ ------------ ------------ ------------
6,251,000 ( 3,267,000) 20,188,000 10,778,000
Gain on sale of
investment in
Celebrity Cruise
Lines Inc. - Note B 21,576,000 21,576,000
Gain resulting from
public offering of
shares by
Royal Caribbean
Cruises Ltd. - Note B 7,842,000 7,842,000
Provision for loss on
vessel disposal
program - Note H (26,536,000) (26,536,000)
------------ ------------ ------------ ------------
Income/(loss) before
Federal income taxes 9,133,000 (3,267,000) 23,070,000 10,778,000
Provision/(credit) for
Federal
income taxes,
reflecting deferred
provision/(credit)
of $1,510,000,
($2,500,000),
$6,310,000 and
$2,900,000 - Note E 3,950,000 (2,500,000) 8,750,000 3,100,000
----------- ----------- ------------ ------------
Net Income/(loss) 5,183,000 ( 767,000) 14,320,000 7,678,000
Retained Earnings at
beginning of period 680,801,000 699,360,000 687,981,000 707,220,000
------------ ------------ ------------ ------------
685,984,000 698,593,000 702,301,000 714,898,000
Cash Dividends Declared 35,000* 16,352,000 16,305,000
------------ ------------ ------------ ------------
Retained Earnings at
end of period $685,949,000 $698,593,000 $685,949,000 $698,593,000
============ ============ ============ ============
Per Share Amounts -
Note I:
Net income/(loss) $.14 ($.02) $.39 $.21
==== ==== ==== ====
Cash dividends declared $.45 $.45
==== ====
<FN>
*Represents dividends declared in June and paid in August 1997, not accrued
at June 30, 1997, on shares issued in July 1997 upon exercise of stock
options.
(See Accompanying Notes)
</TABLE>
<PAGE>
<TABLE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
(UNAUDITED)
-------------------------------------------------------------------
<CAPTION>
SEPTEMBER SEPTEMBER
30, 1997 30, 1996
----------- ------------
<S> <C> <C>
Net cash provided by Operating Activities $ 60,361,000 $ 48,452,000
------------ ------------
Cash Flows from Investing Activities:
Proceeds from sale of investment in
Celebrity Cruise Lines Inc. 120,050,000
Purchases of marketable securities (100,959,000) ( 4,566,000)
Proceeds from sales of marketable
securities 93,959,000 10,526,000
Proceeds from disposal of other
investments 1,385,000
Purchase of minority interest ( 5,102,000)
Purchase of vessels under capital leases ( 20,213,000)
Additions to vessels ( 80,348,000)(a) (104,907,000)
Proceeds from disposal of vessels 4,612,000 58,136,000
Other - net ( 5,653,000) ( 3,570,000)
------------ ------------
Net cash provided by/(used in)
investing activities 26,559,000 ( 63,209,000)
------------ ------------
Cash Flows from Financing Activities:
Issuance of long-term debt (a) 31,753,000
Payments on long-term debt and
obligations under capital leases ( 77,916,000) (41,444,000)
Cash dividends paid ( 16,352,000) (16,305,000)
Issuance of common stock upon exercise
of stock options 8,291,000
Other - net 274,000 529,000
------------ ------------
Net cash (used in)
financing activities ( 85,703,000) (25,467,000)
------------ ------------
Net Increase/(decrease) in Cash 1,217,000 (40,224,000)
Cash, including interest-bearing
deposits, at beginning of period 109,120,000 160,578,000
------------ ------------
Cash, including interest-bearing
deposits, at end of period $110,337,000 $120,354,000
============ ============
<FN>
(a) Excludes $38,000,000 in connection with the delivery of a vessel.
(See Accompanying Notes)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
Notes to Unaudited Condensed Financial Statements
General - As contemplated by the Securities and Exchange Commission, the
accompanying financial statements and footnotes, which have been
rounded to the nearest thousand dollars, have been condensed and
therefore do not contain all disclosures required by generally
accepted accounting principles. Reference should be made to the
Company's Annual Report to Shareholders for the year ended December
31, 1996.
The statements as of September 30, 1997 and for the three month and nine
month periods ended September 30, 1997 and September 30, 1996 are
unaudited. In the opinion of the Company all adjustments (which were
of a normal recurring nature) have been made to present fairly the
results for such unaudited interim periods.
The results of operations for the three month and nine month periods ended
September 30, 1997 are not necessarily indicative of those for a full
fiscal year.
Note A - Foreign Subsidiaries:
A condensed summary of the combined assets and liabilities of the Company's
foreign (incorporated outside the U.S.) subsidiaries, whose operations
are principally conducted in U.S. Dollars, follows:
<TABLE>
<CAPTION>
AS OF
--------------------------------
SEPTEMBER DECEMBER
30, 1997 31, 1996
-------------- ---------------
<S> <C> <C>
Current Assets $ 32,680,000 $ 35,237,000
Vessels, net and Vessels Included
in Disposal Program 1,061,824,000 1,013,415,000
Investment in Cruise Business 160,407,000 239,255,000
Other Assets 119,680,000 113,798,000
-------------- --------------
1,374,591,000 1,401,705,000
-------------- --------------
Current Installments of
Long-term Debt, including inter-
company of $35,800,000 in
1997 and 1996 46,007,000 41,882,000
Other Current Liabilities 21,701,000 12,842,000
-------------- --------------
Total Current Liabilities 67,708,000 54,724,000
Long-term Debt, including
intercompany of $116,350,000
and $143,200,000, and Deferred
Credits, etc. 372,228,000 334,467,000
-------------- --------------
439,936,000 389,191,000
-------------- --------------
Net Assets $ 934,655,000 $1,012,514,000
============== ==============
<FN>
(See Notes on Following Pages)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
Notes to Unaudited Condensed Financial Statements
Note B - Investment in Cruise Business:
In July 1997, the Company sold its 49% ownership interest in Celebrity
Cruise Lines Inc. ("CCLI") for approximately $120,000,000 in cash
(which was used to reduce the Company's then outstanding total long-
term indebtedness of approximately $1,170,000,000) and 3,650,000
shares of Royal Caribbean Cruises Ltd. ("RCCL") common stock,
representing approximately 5% of RCCL's outstanding common shares.
The Company recognized a gain on the sale of $21,576,000 ($12,100,000
after tax, including approximately $2,000,000 of tax on previously
untaxed CCLI earnings).
The Company accounts for its ownership of RCCL common stock as an
investment in a corporate joint venture, using the equity method of
accounting. The excess (approximately $75,000,000) of the cost of
such investment over the Company's proportionate share of the
underlying net assets of RCCL as of the transaction date is being
amortized over 40 years using the straight-line method.
In September 1997, RCCL sold approximately 9,354,000 shares in a public
offering at a net price per share which was substantially above RCCL's
book value per share after giving effect to the offering.
Accordingly, the Company recognized a gain of $7,842,000 ($5,100,000
after tax) representing an increase in its share of RCCL's
shareholders' equity.
The Company's Equity in Results of Cruise Business reflects its share of
the results of CCLI through June 30, 1997 and of RCCL thereafter.
These results are as follows:
<TABLE>
<CAPTION>
CCLI RCCL CCLI
------------ ------------ --------------------------
THREE MONTHS THREE MONTHS NINE MONTHS
SIX MONTHS ENDED ENDED ENDED
ENDED JUNE SEPTEMBER SEPTEMBER SEPTEMBER
30, 1997 30, 1997 30, 1996 30, 1996
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $265,921,000 $612,542,000 $120,860,000 $317,321,000
Costs and expenses 266,264,000 536,611,000 111,870,000 312,805,000
------------- ------------ ------------ ------------
Net income/(loss) ($ 343,000) $ 75,931,000 $ 8,990,000 $ 4,516,000
============= ============ ============ ============
<FN>
(See Notes on Following Pages)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
Notes to Unaudited Condensed Financial Statements
Note C - Bulk Shipping Joint Ventures:
Certain subsidiaries have investments in bulk shipping joint ventures. A
condensed summary of the combined assets and liabilities and results of
operations of the bulk shipping joint ventures follows:
<TABLE>
<CAPTION>
AS OF
--------------------------
SEPTEMBER DECEMBER
30, 1997 31, 1996
----------- ------------
<S> <C> <C>
Cash ($33,152,000 and $20,337,000) and
other current assets (including
$4,379,000 and $8,196,000 due
from owners) $ 42,444,000 $ 35,690,000
Vessels, net 208,783,000 150,108,000
Other assets (including $395,000
and $2,257,000 due from owners) 3,486,000 4,411,000
----------- ------------
254,713,000 190,209,000
------------ ------------
Current installments of long-term debt 7,500,000
Other current liabilities 5,507,000 4,535,000
------------ ------------
13,007,000 4,535,000
Long-term debt 48,750,000
------------ ------------
61,757,000 4,535,000
------------ ------------
Net assets (principally undistributed
net earnings) $192,956,000 $185,674,000
============ ============
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue, primarily from
voyages (including
$8,765,000,
$7,230,000,
$27,310,000 and
$22,635,000 from
vessels chartered
to owners) $12,396,000 $10,286,000 $37,446,000 $31,869,000
Costs and expenses 10,999,000 8,101,000 31,664,000 24,191,000
----------- ----------- ----------- -----------
Net income $ 1,397,000 $ 2,185,000 $ 5,782,000 $ 7,678,000
========== =========== =========== ===========
</TABLE>
(See Notes on Following Pages)
[FN]
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
Notes to Unaudited Condensed Financial Statements
Note D - Agency Fees and Brokerage Commissions:
All subsidiaries with vessels and certain joint ventures are parties to
agreements with Maritime Overseas Corporation ("Maritime") that
provide, among other matters, for Maritime and subsidiaries to render
services related to the chartering and operation of the vessels and
certain general and administrative services for which Maritime and
subsidiaries receive specified compensation. Vessel and voyage
expenses include $1,468,000 (three months ended September 30, 1997),
$1,274,000 (three months ended September 30, 1996), $4,558,000 (nine
months ended September 30, 1997) and $4,453,000 (nine months ended
September 30, 1996) of brokerage commissions to Maritime. By
agreement, Maritime's compensation for any year is limited to the
extent Maritime's consolidated net income from shipping operations
would exceed a specified amount (approximately $1,110,000 for 1997).
Maritime is owned by a director of the Company; directors or officers
of the Company constitute all four of the directors and the majority of
the principal officers of Maritime.
Note E - Taxes:
Effective from January 1, 1987, earnings of the foreign shipping companies,
other than CCLI and RCCL, are subject to U.S. income taxation
currently; post-1986 taxable income may be distributed to the U.S.
parent without further tax. Prior thereto, tax on such earnings was
deferred as long as the earnings were reinvested in foreign shipping
operations. Foreign income, substantially all of which was earned by
companies which are not subject to income taxes in their country of
incorporation, aggregated $30,498,000 (three months ended September 30,
1997), $4,270,000 (three months ended September 30, 1996), $41,563,000
(nine months ended September 30, 1997) and $29,265,000 (nine months
ended September 30, 1996), before any U.S. income tax effect. No
provision for U.S. income taxes on the undistributed income of the
foreign shipping companies accumulated through December 31, 1986 was
required, since such undistributed earnings have been reinvested or are
intended to be reinvested in foreign shipping operations so that the
qualified investment therein is not expected to be reduced below the
corresponding amount at December 31, 1986.
Federal income taxes paid ($263,000 of which related to a prior period)
amounted to $563,000 in the nine months ended September 30, 1997. No
payments of federal income taxes were required or made during the nine
month period ended September 30, 1996. The provisions for federal
income taxes in the three months and nine months ended September 30,
1997 include $1,440,000, representing the tax benefits arising from the
exercise of stock options, credited to Paid-in Additional Capital.
Note F - Long-term Debt:
Agreements relating to long-term debt provide for prepayment privileges (in
certain instances with penalties), limitations on the amount of secured debt
(See Notes on Following Pages)
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
Notes to Unaudited Condensed Financial Statements
Note F - Long-term Debt (continued)
and total borrowings, and acceleration of payment under certain
circumstances, including if any of the minimum consolidated financial
covenants contained in certain of such agreements are not met. The amount
that the Company can use for Restricted Payments, as defined, including
dividends and purchases of its capital stock, is limited as of
September 30, 1997 to $28,600,000.
As of September 30, 1997, the Company is a party to fixed to floating
interest rate swaps (designated as hedges against certain debt) with
various major financial institutions covering notional amounts
aggregating $600,000,000, pursuant to which it pays LIBOR (5.8% as of
September 30, 1997) and receives fixed rates ranging from 5.8% to 8.1%
calculated on the notional amounts. The Company is also a party to
floating to fixed interest rate swaps with various financial
institutions covering notional amounts aggregating approximately
$87,000,000, pursuant to which it pays fixed rates ranging from 6.7% to
7.1% and receives LIBOR. These agreements contain no leverage features
and have various maturity dates from 1998 to 2008.
Approximately 13% of the net book amount of the Company's vessels,
representing three foreign flag and nine U.S. flag vessels, is pledged
as collateral for certain long-term debt.
Interest paid approximated $58,736,000 (nine months ended September 30,
1997) and $49,896,000 (nine months ended September 30, 1996), excluding
capitalized interest.
Note G - Other Income - net:
Other income - net consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- --------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment income:
Interest and dividends $ 2,326,000 $2,744,000 $ 6,618,000 $ 7,169,000
Gain on sale of
securities 10,195,000 3,150,000 25,760,000 11,902,000
Provision for loss
on investments (714,000) (2,857,000)
---------- --------- ----------- ----------
12,521,000 5,894,000 31,664,000 16,214,000
Gain/(loss) on disposal
of vessels (733,000) (588,000) 6,895,000
Foreign currency
exchange gain/(loss) ( 99,000) 119,000
Minority interest ( 68,000) 734,000
Miscellaneous - net 235,000 (839,000) 523,000 (1,136,000)
----------- ---------- ----------- -----------
$12,023,000 $4,888,000 $31,599,000 $22,826,000
=========== ========== ============ ===========
<FN>
(See Notes on Following Page)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------
Notes to Unaudited Condensed Financial Statements
Note H - Vessel Disposal Program:
The Company has announced a program for the disposal of its ten older and
less competitive dry cargo vessels, including one vessel sold in the
third quarter of 1997. The vessel disposal program is scheduled for
completion during 1998. For the nine months ended September 30, 1997,
the vessels held for disposal incurred a pre-tax loss of approximately
$12,800,000, including a charge for allocated interest of $6,600,000
based on the estimated fair value of the vessels. The Company intends
to use the net proceeds from the disposal program, estimated at
approximately $140,000,000, to reduce outstanding debt. In the third
quarter of 1997, the Company established a reserve of $26,536,000
($17,200,000 after tax) for the reduction of the carrying amount
(approximately $163,000,000) of the ten vessels held for disposal to
their estimated fair value (less disposal costs), including the loss,
$4,836,000 ($3,100,000 after tax), on the one vessel sold in the
quarter and for costs in connection with the elimination of related
overhead.
Note I - Other Comments:
1. Net income/(loss) per share is based on the weighted average number of
common shares outstanding during each period: 36,547,000 shares (three
months ended September 30, 1997), 36,234,000 shares (three months ended
September 30, 1996), 36,360,000 shares (nine months ended September 30,
1997) and 36,233,000 shares (nine months ended September 30, 1996).
Stock options have not been included in the computation of net income/(loss)
per share since their effect thereon would either be antidilutive or
not be material.
2. The Company has hedged its exchange rate risk with respect to contracted
future charter revenues receivable in Japanese yen by entering into
currency swaps with a major financial institution that will result in
the Company receiving approximately $107,000,000 for such foreign
currency from October 1, 1997 through 2004.
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
-----------------------------------
Significant Events
- ------------------
There were two events in the third quarter of 1997 that had a significant
impact on the Company's results for that period and the Company's
future operations.
In July 1997, the Company sold its 49% ownership interest in Celebrity
Cruise Lines Inc. ("CCLI") for approximately $120,000,000 in cash and
3,650,000 shares of Royal Caribbean Cruises Ltd. ("RCCL") common stock,
representing approximately 5% of RCCL's outstanding common shares. The
Company recognized a gain on the sale of $21,576,000 ($12,100,000 after
tax). The cash portion of the proceeds was used to repay indebtedness.
The Company accounts for its ownership of RCCL common stock as an
investment in a corporate joint venture, using the equity method of
accounting. The Company recognized a further gain of $7,842,000
($5,100,000 after tax), representing an increase in the carrying amount
of its investment in RCCL by reason of the increase in its share of
RCCL's shareholders' equity after RCCL's public offering of additional
common stock. The realization of interest savings resulting from the
aforementioned repayment of indebtedness commenced in the third quarter
of 1997.
The Company has announced a program for the disposal of its ten older and
less competitive dry cargo vessels, including one vessel sold in the
third quarter of 1997. The vessel disposal program is scheduled for
completion during 1998. For the nine months ended September 30, 1997,
the vessels held for disposal incurred a pre-tax loss of $12,800,000,
including a charge for allocated interest of $6,600,000 based on the
estimated fair value of the vessels. The Company intends to use the
net proceeds from the disposal program, estimated at approximately
$140,000,000, to reduce outstanding debt. In the third quarter of
1997, the Company established a reserve of $26,536,000 ($17,200,000
after tax) for the reduction of the carrying amount (approximately
$163,000,000) of the ten vessels held for disposal to their estimated
fair value (less disposal costs), including the loss, $4,836,000
($3,100,000 after tax), on the one vessel sold in the quarter and for
costs in connection with the elimination of related overhead.
Operations
- ----------
Income From Vessel Operations
- -----------------------------
Revenues and results of vessel operations of the Company are highly
sensitive to patterns of supply and demand for vessels of the types and
sizes owned and operated by the Company and the markets in which those
vessels operate. Freight rates for major bulk commodities are
determined by market forces including local and worldwide demand for
such commodities, volumes of trade, distances between sources and
destinations of cargoes and amount of available tonnage both at the
time such tonnage is required and
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------
Income From Vessel Operations (continued)
- -----------------------------
over periods of projected requirements. Available tonnage is affected, over
time, by the amount of newbuilding deliveries and removal of existing
tonnage from service. Results in particular periods are also affected
by such factors as the mix between voyage and time charters, the timing
of the completion of voyage charters, the time and prevailing rates
when charters that are currently being performed were negotiated, the
levels of applicable rates and the business available as particular
vessels come off existing charters, and the timing of drydocking of
vessels.
Rates in the international crude tanker market, on average, were higher in
the first nine months of 1997 than rates prevailing in the comparable
period of 1996, particularly for VLCCs (over 200,000 dwt) and Aframaxes
(80,000 to 120,000 dwt) in the Caribbean market (the Company's primary
Aframax trading area). VLCC rates continued to rise throughout the
first nine months of 1997 and reached levels above $50,000 per day for
modern double-hulled tonnage by early November 1997. The Company has
four modern double-hulled VLCC's completing charters in November and
December of 1997 that would benefit if these rate levels are
maintained, although some of the benefit would not affect results until
the first quarter of 1998 due to the timing of voyage terminations.
Late in the second quarter and early in the third quarter of 1997,
Caribbean Aframax spot rates declined significantly from their earlier
highs of approximately $40,000 per day to below $20,000 per day in
July. Thereafter, Aframax spot rates remained comparatively low until
early in the fourth quarter when such rates began rising and reached
approximately $30,000 per day before returning to the $22,000 to
$24,000 per day range as the fourth quarter progressed. Rates for
Suezmaxes (120,000 to 160,000 dwt) were not significantly different
than comparable year ago periods through the first three quarters and
early fourth quarter of 1997. Rates for product tankers for the first
nine months of 1997 were comparable to the 1996 period, but were lower
early in the fourth quarter of 1997 than in late 1996. Dry bulk rates
remained at low levels throughout the first nine months of 1997,
although somewhat improved from late 1996, particularly for new
Capesize (160,000 dwt) vessels.
The Company's Aframax tanker pool with PDV Marina - the marine
transportation subsidiary of the Venezuelan state oil company - which
covers all 20 Aframaxes (ten OSG vessels) of both parties, continues to
demonstrate improved earnings for pool vessels as a result of enhanced
opportunities for backhaul cargoes and reduced idle time.
As one indication of recent trends in various charter markets, set forth
below are selected average daily spot market rates for various types
and sizes of vessels in the first half and third quarter of both 1997
and 1996 based on the published reports of one well-known industry
research organization. It is important to note that rates tend to
fluctuate significantly over the course of time, and can vary widely
based on factors such as the age, condition and position of a
particular vessel. Accordingly, the rates shown are not necessarily
indicative of rates achieved by the Company's vessels during any of the
periods.
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
Income From Vessel Operations (continued)
- -----------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1997 1996
----------------- ----------------
First Third First Third
Tankers Half Quarter Half Quarter
- ------- ------- ------- ------- -------
Modern VLCCs $30,600 $37,500 $27,300 $29,600
Suezmaxes (W. Africa-U.S.) 21,300 19,800 19,900 18,700
Aframaxes (Caribbean Market) 26,200 16,400 20,600 14,700
Product Carriers 15,900 9,500 14,400 10,700
Dry Bulk Carriers
- -----------------
Capesize (over 100,000 dwt) 14,700 15,100 12,300 9,900
Panamaxes (50 - 80,000 dwt) 8,900 7,800 8,800 5,400
Income from vessel operations for the three months and nine months ended
September 30, 1997 increased by approximately $6,600,000 and
$10,400,000, respectively, from the comparable periods of 1996. U.S.
flag vessel operations improved by $800,000 in the third quarter of
1997 compared to 1996 and by $8,000,000 in the nine months ended
September 30, 1997 compared to the corresponding 1996 period. These
increases resulted from increased utilization of the Company's U.S.
flag tanker fleet, following commencement in 1996 of long-term
employment for six of OSG's U.S. flag tankers in the Alaska trade.
Operating days for the U.S. flag crude tanker fleet increased to 650
days in the third quarter of 1997 and 2,000 in the first nine months of
1997 from 600 days and 1,700 days, respectively, in the comparable
periods of 1996. The effect of an increased number of drydock days in
the first nine months of 1997 is also reflected. Since late December
1996, the Company's U.S. flag car carrier receives $175,000 per month
under the U.S. Maritime Security Program, which continues through 2005,
subject to annual Congressional appropriations. The Company's U.S.
flag dry bulk carriers had improved operating results in both 1997
periods compared to 1996. Income from foreign flag vessel operations
improved by $5,800,000 and $2,400,000 in the 1997 three month and nine
month periods as compared to the respective 1996 periods. These
results reflect the positive operating contribution of vessels
delivered in late 1996 and the first quarter of 1997 as the Company's
most recent newbuilding program was completed (but see Interest Expense
below). Also, although Aframax rates were significantly lower in the
third quarter of 1997 than earlier in the year, rates for the Company's
Aframax fleet were higher in both 1997 periods compared to 1996.
Notwithstanding some improvement in dry bulk rates in the third quarter
of 1997 compared to 1996, the generally low level of dry bulk rates
throughout 1997 negatively affected results for the Company's dry bulk
fleet.
<FN>
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
Equity in Results of Cruise Business
- ------------------------------------
The Company's Equity in Results of Cruise Business reflects its share of the
results of CCLI through June 30, 1997 and of RCCL thereafter. These
results were income of $3,463,000 (third quarter of 1997), $4,395,000
(third quarter of 1996), $3,284,000 (nine months ended September 30,
1997) and $2,184,000 (nine months ended September 30, 1996). The
excess (approximately $75,000,000) of the cost of the Company's
investment over the Company's proportionate share of the underlying net
assets of RCCL at the date of acquisition is being amortized over 40
years using the straight-line method.
Other Income-net
- ----------------
The details of other income are shown in Note G. Aggregate interest and
dividends did not materially change in the 1997 periods as compared to
1996. Gains on sale of securities were $10,195,000 (third quarter of
1997), $25,760,000 (nine months ended September 30, 1997), $3,150,000
(third quarter of 1996) and $11,902,000 (nine months ended September
30, 1996). Disposal of vessels (other than those referred to on page
11) resulted in losses of $733,000 in the third quarter and $588,000 in
the first nine months of 1997 and a gain of $6,895,000 in the first
nine months of 1996. Other income also reflects provisions for losses
on investments of approximately $700,000 and $2,900,000 in the 1997 and
1996 nine month periods, respectively (none in the third quarter of
either year).
Interest Expense
- ----------------
Interest expense increased in the third quarter and first nine months of
1997 from the comparable periods of 1996 as a result of an increase in
the average amount of debt outstanding in the 1997 periods compared
with 1996 (net of debt reductions from the use of the cash proceeds
from the sale of the Company's investment in CCLI), including debt
incurred in connection with vessels entering the operating fleet,
decreased amounts of interest capitalized in 1997 in connection with
vessel construction and increased rates on floating rate debt.
Interest expense reflects $800,000 (third quarter of 1997), $3,400,000
(first nine months of 1997), $1,600,000 (third quarter of 1996) and
$5,200,000 (first nine months of 1996) of net benefits from the
interest rate swaps referred to below in Liquidity and Sources of
Capital.
Provision for Federal Income Taxes
- ----------------------------------
The provisions for federal income taxes in the third quarter and first nine
months of 1997 increased from the comparable periods of 1996 primarily
because of the improvement in pretax income, adjusted to reflect items
that are not subject to tax and the dividends received deduction. The
provision for federal income taxes in the three months and nine months
ended September 30, 1997 include $1,440,000, representing the tax
benefits arising from the exercise of stock options which were credited
to paid-in additional capital.
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
New Accounting Standard
- -----------------------
Financial Accounting Standard No. 128 "Earnings Per Share" is effective for
periods ending after December 15, 1997. Earlier application is not
permitted. This standard is not expected to have any significant
impact on the Company's earnings per share.
Liquidity and Sources of Capital
- --------------------------------
Working capital at September 30, 1997 was approximately $84,000,000.
Current assets are highly liquid, consisting principally of cash,
interest-bearing deposits and receivables. The Company also had
investments in marketable securities carried as noncurrent assets,
other than securities included in the Capital Construction Fund, with a
market value of approximately $27,000,000 at September 30, 1997.
Net cash provided by operating activities in the first nine months of 1997
approximated $60,000,000 (which is not necessarily indicative of the
cash to be provided by operating activities for a full fiscal year).
Current financial resources, together with cash anticipated to be
generated from operations, are expected to be adequate to meet
requirements for short-term funds in the next year. The Company has an
unsecured long-term credit facility of $600,000,000, of which
$305,000,000 was used at September 30, 1997, and an unsecured short-
term credit facility of $30,000,000, of which $26,000,000 was used at
that date. The latter amount has been classified as long-term since it
is expected to be refinanced under the long-term credit facility. The
cash received in the sale referred to under Significant Events was used
to reduce amounts outstanding under the long-term credit facility.
The Company has used interest rate swaps to effectively convert a portion of
its debt either from a fixed to floating rate basis or from floating to
fixed rate, reflecting management's interest rate outlook at various
times. As of September 30, 1997, The Company is a party to fixed to
floating interest rate swaps (designated as hedges against certain
debt) with various major financial institutions covering notional
amounts aggregating $600,000,000, pursuant to which it pays LIBOR (5.8%
as of September 30, 1997) and receives fixed rates ranging from 5.8% to
8.1% calculated on the notional amounts. The Company is also a party
to floating to fixed interest rate swaps (designated as hedges against
certain debt) with various major financial institutions covering
notional amounts aggregating approximately $87,000,000, pursuant to
which it pays fixed rates ranging from 6.7% to 7.1% and receives LIBOR.
These agreements contain no leverage features and have various maturity
dates from 1998 to 2008. The Company uses derivative financial
instruments for trading purposes from time to time. The Company
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
--------------------------------------------------
Liquidity and Sources of Capital (continued)
- --------------------------------
has hedged its exchange rate risk with respect to contracted future charter
revenues receivable in Japanese yen to minimize the effect of foreign
exchange rate fluctuations on reported income by entering into currency
swaps with a major financial institution to deliver such foreign
currency at fixed rates that will result in the Company receiving
approximately $107,000,000 for such foreign currency from October 1,
1997 through 2004.
- --------------------------------------------------------------------
Ratio of Earnings to Fixed Charges
- ----------------------------------
The ratio of earnings to fixed charges for the nine months ended September
30, 1997 was 1.25 and has been computed by dividing the sum of income
before federal income taxes and fixed charges by fixed charges. Fixed
charges consist of interest expense, including the proportionate share
of interest of joint venture companies, capitalized interest and an
estimate of the interest component of an operating lease.
Independent Accountant's Report on Review of Interim Financial Information
- --------------------------------------------------------------------------
The accompanying financial statements as of September 30, 1997 and for the
three and nine months ended September 30, 1997 and 1996 are unaudited;
however, such financial statements have been reviewed by the Company's
independent accountants.
---------------------------------------------------------------
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
PART II
----------
Item 6(a). Exhibits
- --------- --------
See Exhibit Index on page 20.
Item 6(b). Reports on Form 8-K
- --------- -------------------
During the quarter ended September 30, 1997, the registrant filed a report
on Form 8-K dated July 30, 1997 which reported on Item 2 (Acquisition
or Disposition of Assets) and Item 7 (Financial Statements, Pro Forma
Financial Information and Exhibits).
<PAGE>
Ernst & Young LLP 787 Seventh Avenue Phone: 212 773 3000
New York, New York 10019
INDEPENDENT ACCOUNTANTS' REPORT ON REVIEW OF INTERIM
FINANCIAL INFORMATION
To the Shareholders
Overseas Shipholding Group, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Overseas Shipholding Group, Inc. and subsidiaries as of September 30,
1997 and the related condensed consolidated statements of operations
and retained earnings for the three month and nine month periods ended
September 30, 1997 and 1996 and the related condensed consolidated
statements of cash flows for the nine month periods ended September
30, 1997 and 1996. These financial statements are the responsibility
of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data, and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally
accepted auditing standards, which will be performed for the full year
with the objective of expressing an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the condensed financial statements referred to above
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Overseas Shipholding
Group, Inc. and subsidiaries as of December 31, 1996, and the related
consolidated statements of operations and retained earnings and cash
flows for the year then ended, not presented herein, and in our report
dated February 19, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1996, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.
ERNST & YOUNG LLP
New York, New York
November 10, 1997
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
AND SUBSIDIARIES
-----------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OVERSEAS SHIPHOLDING GROUP, INC.
--------------------------------
(Registrant)
Date: November 13, 1997 MORTON P. HYMAN
----------------- -------------------------
Morton P. Hyman
President
Date: November 13, 1997 ALAN CARUS
----------------- ------------------------
Alan Carus
Controller
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------
EXHIBIT INDEX
-------------
4. Second Amended and Restated Credit Agreement dated as of
August 19, 1997 (previously amended and restated as of
October 31, 1994), among the registrant, two subsidiaries
of the registrant and certain banks.
12. Computation of Ratio of Earnings to Fixed Charges.
15. Letter from Ernst & Young LLP.
27. Financial Data Schedule.
NOTE: Instruments authorizing long-term debt of the
registrant and subsidiaries, which do not exceed
10% of their total assets on a consolidated basis,
are not being filed herewith. The registrant
agrees to furnish a copy of each such instrument
to the Commission upon request.
EXHIBIT 4
---------
=================================================================
$600,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
OVERSEAS SHIPHOLDING GROUP, INC.,
OSG BULK SHIPS, INC.,
OSG INTERNATIONAL, INC.
AND
THE BANKS LISTED HEREIN,
THE CHASE MANHATTAN BANK,
as Syndication Agent,
CITIBANK, N.A.,
as Administrative Agent,
AND
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent
Dated as of August 19, 1997
=================================================================
<PAGE>
INDEX
-----
PAGE
----
SECTION 1 DEFINITIONS 2
1.1 Defined Terms 2
1.2 Construction 30
1.3 Accounting Terms 30
SECTION 2 THE ADVANCES 30
2.1 Advances 30
2.2 Drawdown Notice 30
2.3 Effect of Drawdown Notice 31
2.4 Funding of Advances 31
2.5 Notation of Advances 32
2.6 Reduction of Commitments 32
2.7 Mandatory Prepayments 33
2.8 Several Obligations 33
2.9 Pro Rata Treatment 33
SECTION 3 CONDITIONS 33
3.1 Conditions Precedent to Availability of
the Facility 33
3.2 Further Conditions Precedent 35
3.3 Satisfaction After Drawdown 36
SECTION 4 REPAYMENT AND PREPAYMENT 36
4.1 Repayment 36
4.2 Prepayment 36
4.3 Optional Conversions 37
4.4 Borrowers' Obligations Absolute 37
SECTION 5 INTEREST AND RATE 37
5.1 Payment of Interest; Interest Rate 37
5.2 Calculation of Interest 38
5.3 Maximum Interest 38
SECTION 6 PAYMENTS 38
6.1 Place of Payments, No Set Off 38
6.2 Federal Income Tax Credits 39
6.3 Sharing of Setoffs 39
SECTION 7 REPRESENTATIONS AND WARRANTIES 40
7.1(a) Due Organization and Power 40
7.1(b) Authorization and Consents 40
7.1(c) Binding Obligations 41
7.1(d) No Violation 41
7.1(e) Litigation 41
7.1(f) No Default 41
7.1(g) Compliance with ERISA 41
7.1(h) Environmental Matters. 41
7.1(i) Subsidiaries 42
7.1(j) Financial Statements 43
7.1(k) Tax Returns and Payments 43
7.1(l) Insurance 43
7.1(m) Foreign Trade Control Regulations 43
7.1(n) Not an Investment Company 44
7.1(o) No Material Adverse Change 44
SECTION 8 COVENANTS 44
8.1(A)(i) Performance of Agreements 44
8.1(A)(ii) Notice of Default 44
8.1(A)(iii) Obtain Consents 44
8.1(A)(iv) Financial Statements 44
8.1(A)(v) Corporate Existence 48
8.1(A)(vi) Books, Records, etc. 48
8.1(A)(vii) Inspection 48
8.1(A)(viii) Payment of Obligations 48
8.1(A)(ix) Compliance with Statutes, etc. 48
8.1(A)(x) Environmental Matters 49
8.1(A)(xi) Maintenance of Assets 49
8.1(A)(xii) Insurance 50
8.1(A)(xiii) Shipping Management 50
8.1(A)(xiv) Agent for Service of Process 50
8.1(A)(xv) Consolidated Tangible Net Worth 51
8.1(A)(xvi) Cash Adjusted Debt Service
Coverage Ratio 51
8.1(A)(xvii) Unencumbered Assets to Unsecured
Ratio 51
8.1(A)(xviii) Cash Adjusted Funded Debt to Cash
Adjusted Consolidated Net Tangible
Assets 51
8.1(A)(xix) Security Interest on Change of
Control 51
8.1(A)(xx) Ownership of OBS and OIN 53
8.1(B)(i) Limitation on Liens 53
8.1(B)(ii) Limitations on Funded Debt 53
8.1(B)(iii) Conduct of Business 54
8.1(B)(iv) Limitation on Sale and
Leasebacks 54
8.1(B)(v) Mergers, Consolidations and Sales
of Assets 55
8.1(B)(vi) Transactions with Affiliates 57
8.1(B)(vii) Use of Proceeds 57
8.1(B)(viii) Maximum Investments in Joint
Ventures 57
SECTION 9 EVENTS OF DEFAULT 57
9.1(a) Principal Payments 57
9.1(b) Interest and Other Payments 57
9.1(c) Representations, etc. 57
9.1(d) Impossibility, Illegality 58
9.1(e) Certain Covenants 58
9.1(f) Covenants 58
9.1(g) Indebtedness and other Obligations 58
9.1(h) Note Agreements 58
9.1(i) Bankruptcy 58
9.1(j) Judgments 59
9.1(k) Inability to Pay Debts 59
9.1(l) ERISA Debt 59
9.1(m) Invalidity or Revocation of Guarantee 59
9.2 Indemnification 60
9.3 Application of Moneys 60
SECTION 10 ASSIGNMENTS; PARTICIPATIONS 61
10.1 Assignments 61
10.2 Participations 62
SECTION 11 ILLEGALITY, INCREASED COST,
NON-AVAILABILITY, ETC. 62
11.1 Illegality 62
11.2 Increased Cost 63
11.3 Nonavailability of Funds 64
11.4 Determination of Losses 64
11.5 Compensation for Losses 64
11.6 Compensation for Breakage Costs 65
11.7 Currency Indemnity 65
11.8 Replacement of Bank 66
SECTION 12 FEES, EXPENSES AND INDEMNIFICATION 67
12.1 Commitment Fee 67
12.2 Utilization Fee 67
12.3 Costs, Charges and Expenses 67
12.4 Indemnification 68
SECTION 13 APPLICABLE LAW, JURISDICTION AND WAIVER 68
13.1 Applicable Law 68
13.2 Jurisdiction 68
13.3 WAIVER OF JURY TRIAL 69
SECTION 14 THE AGENTS 69
14.1 Appointment and Authorization 69
14.2 Agents and Affiliates 69
14.3 Action by Agents 70
14.4 Consultation with Experts. 70
14.5 Liability of Agents 70
14.6 Indemnification 70
14.7 Credit Decision 71
14.8 Successor Administrative Agent 71
14.9 Agents' Fees 71
14.10 Distribution of Payments 71
14.11 Holder of Interest in Notes 72
14.12 Assumption re Event of Default 72
14.13 Notification of Event of Default 72
SECTION 15 NOTICES AND DEMANDS 72
SECTION 16 GUARANTY 73
16.1 Guaranty 73
16.2 Guaranty Unconditional 74
16.3 Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances 75
16.4 Waiver by OSG 75
16.5 Waiver of Subrogation 75
16.6 Stay of Acceleration 75
SECTION 17 MISCELLANEOUS 75
17.1 Time of the Essence 75
17.2 Unenforceable, etc., Provisions -
Effect 76
17.3 References 76
17.4 Further Assurances 76
17.5 Entire Agreement, Amendments 76
17.6 Headings 77
17.7 Survival 77
17.8 Consequences of Effectiveness 77
17.9 Confidentiality 77
<PAGE>
EXHIBITS
1 Form of Administrative Questionnaire
2 Form of Assignment and Assumption Agreement
3 Form of Promissory Note
4 Form of Notice of Conversion or Continuation
5 Form of Drawdown Notice
SCHEDULES
1 Banks
2 Applicable Margin
3 Funded Debt At March 31, 1997
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the
"Agreement") is made as of the 19th day of August, 1997, by and
among (1) OVERSEAS SHIPHOLDING GROUP, INC., a corporation
incorporated under the laws of the State of Delaware ("OSG"),
with offices at 1114 Avenue of the Americas, New York, New York
10036, (2) OSG BULK SHIPS, INC., a corporation incorporated under
the laws of the State of New York ("OSG Bulk"), with offices at
1114 Avenue of the Americas, New York, New York 10036, (3) OSG
INTERNATIONAL, INC., a corporation incorporated under the laws of
the Republic of Liberia with offices at 1114 Avenue of the
Americas, New York, New York 10036 ("OSG International"; together
with OSG and OSG Bulk, the "Borrowers", each a "Borrower"), (4)
the banks and financial institutions whose names and addresses
are set out in Schedule 1 hereto (together with any assignee
pursuant to Section 10, the "Banks", each a "Bank"), (5) THE
CHASE MANHATTAN BANK, as syndication agent for the Banks (the
"Syndication Agent"), (6) CITIBANK, N.A., as administrative agent
for the Banks (the "Administrative Agent"), (7) MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as documentation agent for the Banks
(the "Documentation Agent"; together with the Syndication Agent
and the Administrative Agent, the "Agents").
WITNESSETH THAT:
----------------
WHEREAS, the Borrowers, certain banks and the Agents
are parties to an Amended and Restated Credit Agreement, dated as
of October 31, 1994, pursuant to which such banks made a
revolving credit facility available to the Borrowers in the
maximum principal amount of $500,000,000 (the "Existing Credit
Agreement");
WHEREAS, OSG and certain banks are parties to a Senior
Revolving Credit Facility, dated as of August 27, 1996, pursuant
to which such banks made a senior revolving credit facility
available to OSG in the maximum principal amount of $250,000,000
(the "COFR Facility"); and
WHEREAS, the parties hereto desire to further amend and
restate the Existing Credit Agreement and to incorporate the COFR
Facility therein, all within a single senior revolving credit
facility in the maximum principal amount of $600,000,000, the
proceeds of which are to be utilized for the purposes described
in Section 2.1, subject to the terms and conditions of this
Agreement;
NOW, THEREFORE, the parties hereto agree that, upon
satisfaction of the conditions set forth in Section 3.1 below,
the Existing Credit Agreement and the COFR Facility will be
amended and restated and incorporated herein to read in full as
follows:
1. DEFINITIONS
-----------
1.1 Defined Terms. In this Agreement the words and
expressions specified below shall, except where the context
otherwise requires, have the meanings attributed to them below:
"Adjusted Fixed Charges" shall mean for each four fiscal
quarter period (taken as a single
accounting period) for which a
determination is being made, the sum
of (i) Fixed Charges plus (ii) the
average amount of Current Debt of OSG
and its Recourse Subsidiaries
outstanding as of the end of each such
fiscal quarter;
"Administrative Agent" shall have the meaning ascribed
thereto in the preamble;
"Administrative
Questionnaire" shall mean, with respect to each Bank,
an administrative questionnaire
substantially in the form of Exhibit 1
hereto, submitted to the
Administrative Agent (with a copy to
the Borrowers) duly completed by such
Bank;
"Advance" shall mean any amount advanced to the
Borrowers pursuant to Section 2.1 as
either a Base Rate Advance or a LIBOR
Rate Advance; provided that each such
Advance shall be in a minimum amount
of $10,000,000 or any larger multiple
of $1,000,000;
"Advance Time Charter
Revenues" shall mean, as of the date of any
determination thereof, the amount at
which advance time charter revenues of
OSG and its Recourse Subsidiaries are
properly included on the liability
side of OSG's most recent consolidated
balance sheet, determined in
accordance with GAAP, and if not
listed as a separate line item on such
balance sheet, such amounts as are
described separately in the officer's
certificates required pursuant to
Section 8.1(A)(iv)(c);
"Affiliate" shall mean with respect to any Person,
(i) any Person that directly, or
indirectly through one or more
intermediaries, Controls such Person
(a "Controlling Person") or (ii) any
Person (other than such Person or a
Subsidiary of such Person) which is
Controlled by or is under common
Control with a Controlling Person;
"Agent(s)" shall have the meaning ascribed
thereto in the preamble.
"Agreement" shall mean this Second Amended and
Restated Credit Agreement as the same
may be amended, restated, modified or
supplemented from time to time;
"Amendment Effective
Date" shall means the date this Agreement
becomes effective upon satisfaction of
the conditions set forth in Section
3.1 hereof;
"Applicable Margin" shall mean a margin which will vary as
set forth on Schedule 2 attached
hereto based upon the rating levels
assigned to OSG's senior unsecured
debt without third-party credit
enhancement by S&P and Moody's. The
Applicable Margin for an Advance shall
be determined by the Administrative
Agent at or about 10:00 a.m. (New York
City time) two (2) Banking Days prior
to the Drawdown Date for such Advance
and shall be promptly notified in
writing to the Banks and the
Borrowers, such determination of the
Applicable Margin, absent manifest
error, to be conclusive and binding
upon the Borrowers;
"Assignment and
Assumption
Agreement(s)" shall mean the Assignment and
Assumption Agreement(s) executed
pursuant to Section 10.1 substantially
in the form of Exhibit 2;
"Attributable Debt" shall mean, as of the date of any
determination thereof, in connection
with any Sale and Leaseback
Transaction which is not permitted
pursuant to Section 8.1(B)(iv)(b), the
lesser of (i) the fair value of the
assets subject to such transaction or
(ii) the present value (computed in
accordance with GAAP at the imputed
rate of interest used in such
transaction) of the obligation of a
lessee in such transaction for Rentals
during the remaining term of any lease
(including any period for which such
lease has been extended or may, at the
option of the lessor, be extended);
"Bank(s)" shall have the meaning ascribed
thereto in the preamble;
"Banking Day(s)" shall mean day(s) on which banks are
open for the transaction of business
in London, England and New York, New
York;
"Base Rate" shall mean a fluctuating rate of
interest per annum equal to the higher
of:
(a) the rate of interest most
recently publicly announced by the
Administrative Agent in New York
City, New York as its prime rate;
and
(b) the Federal Funds Rate,
plus 1/2 of 1%.
The Base Rate is not necessarily
intended to be the lowest rate of
interest determined by the
Administrative Agent in connection
with extensions of credit. Changes in
the rate of interest on any Advance
maintained as a Base Rate Advance
shall take effect simultaneously with
each change in the Base Rate. The
Administrative Agent shall give notice
promptly to the Borrowers of changes
in the Base Rate;
"Base Rate Advance" shall mean an Advance bearing interest
based on the Base Rate;
"Borrower(s)" shall have the meaning ascribed
thereto in the preamble;
"Capital Construction
Funds" shall mean as of the date of any
determination thereof, the aggregate
amount on deposit in capital
construction funds established and
maintained pursuant to agreement with
the Secretary of Transportation in
accordance with Section 1177 of the
Merchant Marine Act, 1936, as amended,
46 U.S.C. Appx. Section 1177, for the
account of OSG and its Recourse
Subsidiaries;
"Capitalized Lease" shall mean any lease the obligation
for Rentals with respect to which is
required to be capitalized on a
balance sheet of the lessee in
accordance with GAAP;
"Capitalized Rentals" of any Person shall mean, as of the
date of any determination thereof, the
amount at which the aggregate Rentals
due and to become due under all
Capitalized Leases under which such
Person is a lessee would be reflected
as a liability on a balance sheet of
such Person;
"Cash" shall mean as of the date of any
determination thereof, the total
amount of all cash as determined in
accordance with GAAP of OSG and its
Recourse Subsidiaries including,
without limitation, cash of OSG and
its Recourse Subsidiaries included in
Capital Construction Funds (net of any
imputed tax effects thereon), interest-
bearing deposits in banks or trust
companies described in clause (c) of
the definition of "Permitted
Investments" with maturities of less
than one year held by OSG and its
Recourse Subsidiaries as the same are
reflected in a consolidated balance
sheet of OSG and its Subsidiaries
delivered in accordance with Section
8.1(A)(iv), and "Cash" shall also
include, for the purposes of the
calculations of Cash Adjusted
Consolidated Net Tangible Assets and
Cash Adjusted Funded Debt required by
Section 8.1(A)(xviii) only, Cash of
OSG and its Recourse Subsidiaries
included in Restricted Funds;
"Cash Adjusted
Consolidated Net
Tangible Assets" shall mean, as of the date of any
determination thereof, Consolidated
Net Tangible Assets less Cash;
"Cash Adjusted Debt
Service Coverage
Ratio" shall mean, for each four fiscal
quarter period (taken as a single
accounting period) for which a
determination is being made, the ratio
of Cash Adjusted Income Available for
Fixed Charges to Adjusted Fixed
Charges;
"Cash Adjusted Funded
Debt" shall mean, as of the date of any
determination thereof, Consolidated
Funded Debt less Cash;
"Cash Adjusted Income
Available for Fixed
Charges" shall mean, for any period, with
respect to OSG and its Recourse
Subsidiaries, the sum of (without
duplication) (i) Net Income Available
for Fixed Charges, (ii) depreciation
and amortization of OSG and its
Recourse Subsidiaries determined on a
consolidated basis in accordance with
GAAP for such period, and (iii) 75% of
the average amount of Cash outstanding
as of the end of each of the four
quarterly periods included in the
determination;
"Code" shall mean the Internal Revenue Code
of 1986, as amended, and any successor
statute and regulations promulgated
thereunder;
"COFR Advance(s)" shall have the meaning ascribed
thereto in Section 2.1;
"COFR Facility" shall have the meaning ascribed
thereto in the preamble;
"COFR Advance Limit" shall mean the maximum aggregate
principal amount outstanding of COFR
Advances, such amount not to exceed
$250,000,000;
"COFR Subsidiary" shall mean General Guaranty
Corporation, a corporation organized
and existing under the laws of the
State of Delaware;
"Collateral" shall have the meaning set forth in
Section 8.1(A)(xix);
"Commitment" shall mean in relation to a Bank, the
portion of the Facility set out
opposite its name in Schedule 1 hereto
or, as the case may be, in any
relevant Assignment and Assumption
Agreement, as reduced from time to
time pursuant to the terms of this
Agreement;
"Consolidated Funded
Debt" shall mean all Funded Debt of OSG and
its Recourse Subsidiaries, determined
on a consolidated basis eliminating
intercompany items;
"Consolidated Net
Income" for any period shall mean consolidated
net income of OSG and its Recourse
Subsidiaries for such period, as shown
on the consolidated financial
statements of OSG and its Recourse
Subsidiaries delivered in accordance
with Section 8.1(A)(iv);
"Consolidated Net
Tangible Assets" shall mean as of the date of any
determination thereof the total amount
of all Tangible Assets after excluding
therefrom (i) all Restricted
Investments of OSG and its Recourse
Subsidiaries (valued in accordance
with GAAP) and (ii) any write-up of
fixed assets of OSG and its Recourse
Subsidiaries other than write-ups in
accordance with GAAP of assets of a
business made after the acquisition of
such business after March 31, 1997 and
after deducting all liabilities except
deferred income taxes, deferred
credits, Advance Time Charter
Revenues, Minority Interests (if
considered to be liabilities),
Unterminated Voyage Revenues and
Consolidated Funded Debt;
"Consolidated Net Worth" shall mean, as of the date of any
determination thereof, Consolidated
Tangible Net Worth plus (to the extent
otherwise excluded therefrom)
Intangible Assets of OSG and its
Recourse Subsidiaries;
"Consolidated Tangible
Net Worth" shall mean, as of the date of any
determination thereof, the total of
stockholders' equity (as shown on the
most recent consolidated balance sheet
of OSG and its Recourse Subsidiaries)
less Intangible Assets of OSG and its
Recourse Subsidiaries;
"Control" means, for purposes of the definition
of "Affiliate", with respect to any
Person, possession, directly or
indirectly, of the power to direct or
cause the direction of the management
or policies of such Person, whether
through the ownership of voting
securities, by contract or otherwise
(for purposes of the aforesaid
definition, the term "Control" used as
a verb has a corresponding meaning);
"conversion date" shall have the meaning set forth in
Section 11.7(a);
"Creditors" shall mean, together, the Agents and
the Banks, each, a "Creditor";
"Current Debt" of OSG or any Recourse Subsidiary
shall mean as of the date of any
determination thereof (i) the Current
Portion, (ii) all other Debt other
than Funded Debt and (iii) (without
duplication) Guarantees by such Person
of Debt of the type described in
clauses (i) and (ii);
"Current Portion" shall mean the portion (determined in
accordance with GAAP) of long-term
Debt of OSG or any Recourse Subsidiary
shown as a current liability on the
consolidated balance sheet of OSG and
its Recourse Subsidiaries;
"Debt" of OSG or any Recourse Subsidiary
shall mean (i) all liabilities for
money borrowed (excluding Debt defined
herein as Non-Recourse Debt) as
determined in accordance with GAAP
eliminating intercompany items,
(ii) (without duplication) all
Capitalized Rentals of such Person
(other than rentals owing from OSG or
any Recourse Subsidiary to OSG or
another Recourse Subsidiary), and
(iii) (without duplication) all
Guaranties by such Person of Debt of
Persons (other than Debt of OSG or any
Recourse Subsidiary);
"Default Rate" shall mean the Base Rate as in effect
from time to time plus two percent
(2%);
"Derivatives
Obligations" of any Person shall mean all
obligations of such Person in respect
of any rate swap transaction, basis
swap, forward rate transaction,
commodity swap, commodity option,
equity or equity index swap, equity or
equity index option, bond option,
interest rate option, foreign exchange
transaction, cap transaction, floor
transaction, collar transaction,
currency swap transaction, cross-
currency rate swap transaction,
currency option or any other similar
transaction (including any option with
respect to any of the foregoing
transactions) or any combination of
the foregoing transactions;
"Documentation Agent" shall have the meaning ascribed
thereto in the preamble;
"Dollars" or "$" the legal currency, at any relevant
time hereunder, of the United States
of America and, in relation to all
payments hereunder, in same day funds
settled through the New York Clearing
House Interbank Payments System (or
such other Dollar funds as may be
determined by the Administrative Agent
to be customary for the settlement in
New York City of banking transactions
of the type herein involved);
"Drawdown Date" any date, being a Banking Day, not
later than the date falling one day
prior to the Final Payment Date, upon
which the Borrowers have requested
that an Advance be made as provided in
Section 2.1;
"Drawdown Notice" shall have the meaning ascribed
thereto in Section 2.2;
"Environmental
Approvals" shall have the meaning ascribed
thereto in Section 7.1(h);
"Environmental Claim" shall have the meaning ascribed
thereto in Section 7.1(h);
"Environmental Laws" shall have the meaning ascribed
thereto in Section 7.1(h);
"ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as
amended;
"ERISA Affiliate" shall mean a trade or business
(whether or not incorporated) which is
under common control with OSG within
the meaning of Sections 414(b),(c),(m)
or (o) of the Code;
"ERISA Group" shall mean OSG and its Subsidiaries;
"Event(s) of Default" shall mean any of the events set out
in Section 9.1;
"Excess Utilization
Amount" shall mean 66 2/3% of the Facility;
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended;
"Facility" the sum to be made available by the
Banks to the Borrowers in the
aggregate principal amount not to
exceed Six Hundred Million Dollars
($600,000,000) pursuant to Section 2
hereof, as the same may be reduced
from time to time pursuant to Section
2.6 hereof;
"Facility Balance" shall mean the Dollar amount of the
Facility outstanding at any time;
"Facility Period" shall mean the period from the date
hereof to the date which is five (5)
years from the date hereof;
"Federal Funds Rate" shall mean, for any period, a
fluctuating interest rate per annum
equal for each day during such period
to the weighted average of the rates
on overnight Federal funds
transactions with members of the
Federal Reserve System arranged by
Federal funds brokers, as published
for such day (or, if such day is not a
Banking Day, for the next preceding
Banking Day) by the Federal Reserve
Bank of New York, or, if such rate is
not so published for any day which is
a Banking Day, the average of the
quotations for such day on such
transactions received by the
Administrative Agent from three (3)
Federal funds brokers of recognized
standing selected by the
Administrative Agent;
"Final Payment Date" shall mean the date which falls on the
fifth anniversary of the date of this
Agreement or, if such day is not a
Banking Day, the Final Payment Date
shall be the immediately preceding
Banking Day;
"Fixed Charges" for any period shall mean on a
consolidated basis the sum of (i) all
Rentals (other than Rentals on
Capitalized Leases) payable in respect
of such period by OSG and its Recourse
Subsidiaries, and (ii) all Interest
Charges on all Indebtedness (including
the interest component of Rentals on
Capitalized Leases) of OSG and its
Recourse Subsidiaries;
"Funded Debt" of any Person shall mean all Debt of
such Person having a final maturity of
more than one year from the date of
origin thereof (or which is renewable
or extendible at the option of the
obligor for a period or periods more
than one year from the date of
origin), excluding the Current
Portion;
"GAAP" shall mean generally accepted
accounting principles at the time in
the United States, except that (so
long as the Statement of Financial
Accounting Standards No. 94 (or any
substantially similar successor
statement) is in effect), with respect
to financial statements of OSG and its
Subsidiaries, the failure to
consolidate Non-Recourse Subsidiaries
shall be deemed to be in accordance
with such principles;
"Guarantee" by any Person shall mean, without
duplication, any obligation (other
than endorsements in the ordinary
course of business of negotiable
instruments for deposit or
collection), contingent or otherwise,
of such Person directly or indirectly
guaranteeing any Debt or other
obligation of any other Person and,
without limiting the generality of the
foregoing, any obligation, direct or
indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or
advance or supply funds for the
purchase or payment of) such Debt or
other obligation (whether arising by
virtue of partnership arrangements, by
agreement to keep-well, to take-or-pay
(or similar arrangements involving the
purchase of goods, securities or
services), or to maintain financial
statement conditions or otherwise) or
(ii) entered into for the purpose of
assuring in any other manner the
obligee of such Debt or other
obligation of the payment thereof or
to protect such obligee against loss
in respect thereof (in whole or in
part), provided that the term
"Guarantee" used as a verb has a
corresponding meaning;
"Indebtedness" of any Person shall mean and include
all obligations of such Person which
in accordance with GAAP shall be
classified upon a balance sheet of
such Person as liabilities of such
Person, and in any event shall include
all Debt;
"Intangible Assets" shall mean, as of the date of any
determination thereof, good will,
patents, trade names, trade marks,
copyrights, franchises, experimental
expense, organization expense,
unamortized debt discount and expense,
deferred charges (other than
unamortized deferred drydock costs,
unterminated voyage expenses, prepaid
insurance, prepaid taxes, prepaid
charter hire and other prepaid items
properly excludable from intangible
assets under GAAP), the excess of cost
of shares acquired over fair value of
underlying tangible assets and such
other assets as are properly
classified as "intangible assets" in
accordance with GAAP;
"Interest Charges" for any period shall mean all interest
(excluding only capitalized interest
in connection with vessel construction
prior to delivery thereof, which
capitalized interest is not paid or
payable and is included in Debt) and
all amortization of debt discount and
expense on any particular Indebtedness
for which such calculations are being
made;
"Interest Period" shall mean with respect to any LIBOR
Rate Advance, each period commencing
on the date such LIBOR Rate Advance is
made or converted from a Base Rate
Advance or the last day of the next
preceding Interest Period with respect
to such LIBOR Rate Advance and ending
on the same day in the first, second,
third or sixth (as selected by the
Borrowers) calendar month thereafter,
except that each such Interest Period
which commences on the last Banking
Day of a calendar month (or on any day
for which there is no numerically
corresponding day in the appropriate
subsequent calendar month) shall end
on the last Banking Day of the
appropriate subsequent calendar month.
If at the end of any then existing
Interest Period the Borrowers fail to
give notice of a selected Interest
Period, the relevant Interest Period
shall be one month.
Notwithstanding the foregoing, (i) no
Interest Period may extend beyond the
Final Payment Date; (ii) each Interest
Period which would otherwise end on a
day which is not a Banking Day shall
end on the next succeeding Banking Day
(or, if such next succeeding Banking
Day falls in the next succeeding
calendar month, on the next preceding
Banking Day); (iii) each Interest
Period which would otherwise commence
before and end after the Final Payment
Date shall end on the Final Payment
Date; and (iv) notwithstanding clauses
(i) and (iii) above, if any Interest
Period would have a duration of less
than one month, such LIBOR Rate
Advances shall be Base Rate Advances
during such period.
"Investments" shall mean all investments, in cash or
by delivery of property made, directly
or indirectly in any Person, whether
by acquisition of shares of capital
stock, indebtedness or other
obligations or Securities or by loan,
advance, capital contribution or
otherwise; provided, however, that
"Investments" shall not mean or
include routine investments in
property to be used or consumed in the
ordinary course of business;
"Joint Venture" shall mean at any date any Person
(other than a Subsidiary of OSG) in
which OSG or any Subsidiary of OSG has
an ownership interest which would be
accounted for in the consolidated
financial statements of OSG and its
consolidated Subsidiaries by the
equity method if such statements were
prepared as of such date;
"judgment currency" shall have the meaning set forth in
Section 11.7(a);
"LIBOR Rate" shall mean, with respect to any
Interest Period for any LIBOR Rate
Advance, the rate per annum determined
by the Administrative Agent to be
equal to the quotient (rounded
upwards, if necessary, to the next
higher 1/16 of 1%) of (y) (i) the rate
of interest for deposits in Dollars
for a period equal to the number of
days in such Interest Period which
appears on the Telerate Page 3750 as
of 11:00 A.M., London time, on the day
that is two London Banking Days prior
to the first day of such Interest
Period, or (ii) if such rate does not
appear on the Telerate Page 3750 at
such time, the rate per annum at which
deposits in Dollars are offered to the
Administrative Agent in immediately
available funds at its LIBOR lending
office in an amount comparable to the
principal amount of such LIBOR Rate
Advance for a period equal to such
Interest Period at approximately
10:00 A.M., New York City time, on the
date two Banking Days before the first
day of such Interest Period, divided
by (z) a number equal to 1.00 minus
the LIBOR Rate Reserve Percentage.
"LIBOR Rate Advance" shall mean an Advance bearing interest
based on the LIBOR Rate;
"LIBOR Rate Reserve
Percentage" shall mean, for any day, the maximum
percentage (expressed as a decimal)
specified from time to time by the
Board of Governors of the Federal
Reserve System (or any successor) for
determining the maximum reserve
requirements (including, but not
limited to, supplemental, marginal and
emergency reserves) with respect to
eurocurrency funding (currently
referred to as "Eurocurrency
Liabilities") of a member bank in such
System. The LIBOR Rate shall be
adjusted automatically with respect to
any LIBOR Rate Advance outstanding on
the effective date of any change in
the LIBOR Rate Reserve Percentage, as
of such effective date;
"Lien" shall mean any interest in property
securing an obligation owed to, or a
claim by, a Person other than the
owner of the property, whether such
interest is based on the common law,
statute or contract, and including but
not limited to the security interest
lien arising from a mortgage,
encumbrance, pledge, conditional sale
or trust receipt or a lease,
consignment or bailment for security
purposes. The term "Lien" shall
include reservations, exceptions,
encroachments, easements, right-of-
way, covenants, conditions,
restrictions, leases and other title
exceptions and encumbrances
(including, with respect to stock,
stockholder agreements, voting trust
agreements, buy-back agreements and
all similar arrangements) affecting
property. For the purposes of this
Agreement, OSG or a Recourse
Subsidiary shall be deemed to be the
owner of any property which it has
acquired or holds subject to a
conditional sale agreement,
Capitalized Lease or other arrangement
pursuant to which title to the
property has been retained by or
vested in some other Person for
security purposes and such retention
or vesting shall constitute a Lien;
"Majority Banks" shall mean Banks whose aggregate
Commitments exceed one half of the
total Commitments or if the
Commitments have terminated, Banks
holding in the aggregate in excess of
one-half of the Facility Balance;
"Material Adverse
Change" shall mean the occurrence of an event
or condition which materially impairs
the ability of OSG and its
Subsidiaries to meet any of their
obligations with regard to (1) the
Facility and the financing
arrangements established in connection
therewith or (2) any of their
respective other obligations that are
material to OSG and its Subsidiaries
considered as a whole;
"Material Debt" shall mean Debt (other than the
Advances) of OSG and/or one or more of
its Subsidiaries, arising in one or
more related or unrelated
transactions, in an aggregate
principal amount exceeding $10,000,000
(or its equivalent in any other
currency);
"Material Financial
Obligations" means (i) a principal or face amount
of Debt and/or (ii) payment
obligations in respect of Derivatives
Obligations (determined in respect of
any counterparty on a net basis), in
each case of OSG and/or one or more of
its Subsidiaries and arising in one or
more related or unrelated
transactions, exceeding in the
aggregate $10,000,000 (or its
equivalent in any other currency);
"Material Subsidiary" shall mean, at any date each of the
following: (i) any Subsidiary of OSG
(other than OSG Bulk or OSG
International) which owns, leases or
charters any vessel on such date and
(ii) any Subsidiary or Subsidiaries of
OSG (other than any such Subsidiary or
Subsidiaries referred to in the
foregoing clauses) the assets of
which, individually or in the
aggregate, had an aggregate book value
(net of depreciation) as of the date
of the consolidated balance sheet of
OSG and its Subsidiaries most recently
delivered or required to be delivered
to the Administrative Agent pursuant
to Section 8.1(A)(iv) prior to such
date in excess of the lesser of (x)
$50,000,000 and (y) 2% of the
aggregate book value (net of
depreciation) of all assets of OSG and
its Subsidiaries as of the date of
such balance sheet provided, that, for
purposes of Sections 9.1(i) and (k)
"Material Subsidiary" shall mean any
Subsidiary of OSG of the type referred
to in clause (i) or (ii) hereof;
"Materials of
Environmental Concern" shall have the meaning ascribed
thereto in Section 7.1(h);
"Minority Interests" shall mean any shares of stock of any
class of a Subsidiary (other than
directors' qualifying shares as
required by law) that are not owned by
OSG and/or one or more of its Recourse
Subsidiaries. Minority Interests
shall be valued by valuing Minority
Interests constituting preferred stock
at the voluntary or involuntary
liquidating value of such preferred
stock, whichever is greater, and by
valuing Minority Interests
constituting common stock at the book
value of capital and surplus
applicable thereto adjusted, if
necessary, to reflect any changes from
the book value of such common stock
required by the foregoing method of
valuing Minority Interests in
preferred stock;
"Moody's" shall mean Moody's Investors Service,
Inc., a credit rating agency;
"Multiemployer Plan" shall mean at any time a
"multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) to which
OSG or any ERISA Affiliate is making
or accruing an obligation to make
contributions or has within any of the
preceding three plan years made or
accrued an obligation to make
contributions;
"Multiple Employer
Plan" means at any time an employee benefit
plan, other than a Multiemployer Plan,
subject to Title IV of ERISA to which
OSG or any ERISA Affiliate, and one or
more employers other than OSG or an
ERISA Affiliate, is making or accruing
an obligation to make contributions
or, in the event that any such plan
has been terminated, to which OSG or
any ERISA Affiliate made or accrued an
obligation to make contributions
during any of the five plan years
preceding the date of termination of
such plan;
"Net Income Available
for Fixed Charges" for any period shall mean the sum of
(i) Consolidated Net Income during
such period plus (to the extent
deducted in determining Consolidated
Net Income), (ii) all provisions for
any Federal, state or other taxes
based on income made by OSG and its
Recourse Subsidiaries during such
period and (iii) Fixed Charges during
such period;
"Non-Recourse Debt" shall mean Debt of any Subsidiary
(i) that is not Guaranteed by OSG or
any other Recourse Subsidiary of OSG,
(ii) that is not secured by a Lien on
any asset of OSG or any Recourse
Subsidiary and (iii) in respect of
which neither OSG nor any of its
Recourse Subsidiaries has any express
obligation or has written any
instrument or letter indicating its
support for such Subsidiary; provided
that Debt of such Subsidiary shall
constitute Non-Recourse Debt only if
(x) OSG shall have given the Banks,
through the Administrative Agent,
written notice at least 20 days prior
to the incurrence, issuance,
assumption or Guarantee thereof (or,
in the case of Debt of a Person to be
acquired by such Subsidiary, prior to
the time of such acquisition) and (y)
the terms and conditions of the
related documentation insofar as they
relate to the non-recourse nature of
such Debt, and the final form of such
documentation with respect thereto,
shall be reasonably satisfactory to
the Majority Banks;
"Non-Recourse
Subsidiary" shall mean, at any time, a Subsidiary
of OSG (i) having no Debt at such time
(other than Non-Recourse Debt) and
(ii) as to which an officer of OSG
has, prior to the issuance,
incurrence, assumption or Guarantee of
any Non-Recourse Debt by such
Subsidiary, delivered a certificate to
the Administrative Agent certifying
that such Subsidiary is a Non-Recourse
Subsidiary in accordance with the
terms of this Agreement;
"Note" shall mean a promissory note, to be
executed by a Borrower in favor of the
Administrative Agent pursuant to
Section 3.1(b) to evidence the
Facility and substantially in the form
set out in Exhibit 3 or in such other
form as the Administrative Agent may
agree and shall include any promissory
note issued by such Borrower pursuant
to Section 10.1, collectively, the
"Notes";
"Note Agreements" shall mean (i) that certain Note
Agreement dated as of June 1, 1993
among OSG and the Purchasers therein
named, and (ii) that certain Note
Agreement dated as of March 1, 1992
among OSG and the Purchasers therein
named;
"Notice of Conversion
or Continuation" shall mean a written notice, in
substantially the form of Exhibit 4 to
this Agreement, delivered by the
Borrowers to the Administrative Agent
pursuant to Section 4.3 of this
Agreement;
"Operating Assets" of OSG and its Recourse Subsidiaries
shall mean, as of the date of any
determination thereof, all assets of
such Person as determined in
accordance with GAAP other than Cash
and marketable securities of OSG and
its Recourse Subsidiaries;
"OSG" shall have the meaning ascribed
thereto in the preamble;
"OSG Bulk" shall have the meaning ascribed
thereto in the preamble;
"OSG International" shall have the meaning ascribed
thereto in the preamble;
"PBGC" shall have the meaning ascribed
thereto in Section 8.1(A)(iv)(h);
"Permitted Countries" shall mean any or all of the
following: United States of America,
United Kingdom, Ireland, France,
Belgium, the Netherlands, Germany,
Sweden, Denmark, Norway, Switzerland,
Finland, Austria, Spain, Portugal,
Italy, Luxembourg, Canada and Japan;
"Permitted Investments" shall mean any of the following:
(a) Investments in commercial
paper maturing in 270 days or less
from the date of issuance which,
at the time of acquisition by OSG
or any Subsidiary, is rated one of
the two highest ratings by S&P or
by Moody's or any substantially
similar commercial paper or short-
term ratings by any other
nationally recognized credit
rating agency domiciled in the
United States of America or the
United Kingdom of similar standing
(a "Substitute Rating Agency");
(b) Investments in
obligations issued by or
guaranteed by the United States of
America or any agency or
instrumentality of the United
States of America, in either case,
maturing in three years or less
from the date of acquisition
thereof;
(c) Investments in
certificates of deposit, time
deposits or bankers' acceptances
issued by a Bank or any other bank
or trust company organized under
the laws of any Permitted Country
or any state thereof, having
capital, surplus and undivided
profits aggregating at least
$300,000,000;
(d) Investments in
indebtedness of any governmental
body of the United States of
America or any State or political
subdivision thereof, which
indebtedness is at all times
accorded one of the two highest
ratings by S&P, Moody's, or a
Substitute Rating Agency maturing
not later than three years from
the date of acquisition thereof
(or, if maturing more than three
years after the date of
acquisition, which is subject to a
put at par by the holder thereof
on a weekly or more frequent
basis);
(e) Investments in money
market investment programs which
are classified as a current asset
in accordance with GAAP and which
are administered by reputable
financial institutions having
capital, surplus and undivided
profits of at least $300,000,000
and which are registered under the
Investment Company Act of 1940;
and
(f) investments in money
market and auction rate preferred
stocks rated "A" or better by S&P
or Moody's or a similar category
by a Substitute Rating Agency;
"Person" shall mean an individual, partnership,
corporation, limited liability
company, trust or unincorporated
organization or other entity of any
kind, and a government or an agency or
political subdivision thereof;
"Plan" shall mean any employee benefit plan
(other than a Multiemployer Plan or a
Multiple Employer Plan) covered by
Title IV of ERISA;
"rate of exchange" shall have the meaning set forth in
Section 11.7(d);
"Recourse Subsidiaries" shall mean all Subsidiaries of OSG
other than the Non-Recourse
Subsidiaries;
"Regulation U" shall mean Regulation U of the Board
of Governors of the Federal Reserve
System, as in effect from time to
time;
"Rentals" shall mean and include as of the date
of any determination thereof all fixed
payments (including as such all
payments which the lessee is obligated
to make to the lessor on termination
of the lease or surrender of the
property) payable by OSG or a Recourse
Subsidiary, as lessee or sublessee
under a lease of real or personal
property (excluding fixed payments on
any item of personal property
involving rentals of less than $1,000
per month each and $10,000 per month
in the aggregate), but shall be
exclusive of any amounts required to
be paid by OSG or a Recourse
Subsidiary, directly or indirectly
(whether or not designated as rents or
additional rents), on account of
maintenance, repairs, insurance, taxes
and similar charges. Fixed rents
under any so-called "percentage
leases" shall be computed solely on
the basis of the minimum rents, if
any, required to be paid by the lessee
regardless of sales volume or gross
revenues;
"Replacement Bank" shall have the meaning set forth in
Section 11.8 of this Agreement;
"Restricted Funds" shall mean restricted funds
established and maintained pursuant to
Title XI reserve fund and financial
agreements between OSG or any of its
Subsidiaries and the Secretary of
Transportation in accordance with
Title XI of the Merchant Marine Act,
1936, as amended, and the regulations
promulgated thereunder; provided that
"Restricted Funds" shall mean, for any
period, the aggregate amount on
deposit in Restricted Funds as so
defined as of the last day of such
period, as the same is reflected in a
consolidated balance sheet of OSG and
its Subsidiaries as of such date;
"Restricted Investments" shall mean all Investments by OSG or
any Recourse Subsidiary in any Person
or property except the following:
(a) Permitted Investments;
(b) Cash;
(c) Investments in the
Shipping and Related Businesses in
whatever form;
(d) Investments by OSG and
its Recourse Subsidiaries in and
to Recourse Subsidiaries,
including any Investment in a
corporation which, after giving
effect to such Investment, will
become a Recourse Subsidiary;
(e) Investments in property
to be used in the ordinary course
of business;
(f) Investments in marketable
securities (as defined in
accordance with GAAP); and
(g) Investments (in addition
to those listed in (a) through (f)
above) in Persons not engaged in
Shipping and Related Businesses
and which are not Recourse
Subsidiaries in an amount
(excluding Investments existing as
of the date of this Agreement) not
to exceed the sum of
(i) $10,000,000 plus (ii) 10% of
Consolidated Tangible Net Worth;
"Sale and Leaseback
Transaction" shall mean any arrangement with any
Person (not including OSG or any
Recourse Subsidiary) or to which such
Person is a party, providing for the
leasing by OSG or a Recourse
Subsidiary for a period, including
renewals, in excess of three years of
any asset which has been or is to be
sold or transferred more than 180 days
after the acquisition or occupancy
thereof or the completion of
construction and commencement of full
operation thereof, whichever is later,
by OSG or any Recourse Subsidiary to
such Person;
"Secured Debt" shall mean all Debt which is secured
by a Lien on any of the property or
assets of OSG or any of its Recourse
Subsidiaries;
"Security" shall have the same meaning as in
Section 2(1) of the Securities Act of
1933, as amended;
"Security Documents" shall have the meaning set forth in
Section 8.1(A)(xix);
"Senior Funded Debt" shall mean all Consolidated Funded
Debt other than Subordinated Funded
Debt;
"Shipping and
Related Businesses" shall mean any one or all of the
following: owning, chartering,
leasing, crewing, navigating,
managing, supplying, operating,
building or repairing commercial
vessels of all kinds, including but
not limited to cargo ships, liners,
container ships, passenger vessels,
fishing vessels, dredges, submersible
and semisubmersible platforms, tugs,
barges and ferries; owning, operating
or managing transportation assets
ancillary to or in furtherance of the
transportation of freight and
passengers by water; owning, operating
or managing warehouses, terminals and
other facilities of any kind
incidental or ancillary to or in
furtherance of the transportation of
freight and passengers by water; and
owning, managing or operating
pipelines, terminals, docks, piers,
quays, wharves, dry docks, storage
facilities and port facilities
incidental or ancillary to or in
furtherance of the transportation of
freight and passengers by water;
"Shipping Manager" shall mean the principal company that,
as of the date of this Agreement, is
acting as agent for OSG and its
Subsidiaries in respect of ships
owned, leased or chartered by, and is
providing substantially all of the
general and administrative services
to, OSG and its Subsidiaries, or any
Person, if, for the period of two
years after the date of formation of
such Person, all or substantially all
of the executive officers and
directors were executive officers or
directors, as the case may be, of the
Shipping Manager immediately prior to
the formation of such Person, except
any executive officer or director who
shall have been appointed or elected
to such position as a result of any
death, disability, retirement or
incapacity of any such executive
officer or director;
"S&P" shall mean Standard & Poor's Rating
Services, a credit rating agency;
"Subordinated
Funded Debt" shall mean all unsecured Funded Debt
of the Borrowers which shall contain
or have applicable thereto
subordination provisions (reasonably
satisfactory to the holders of not
less than 66 2/3% in aggregate of the
Commitments or, if the Commitments
have been terminated, of the Facility
Balance) providing for the
subordination thereof to other Debt of
the Borrowers including, without
limitation, the Notes;
"subsidiary" shall mean as to any particular
Person, any corporation or other
entity of which more than 50% (by
number of votes of the Voting Stock or
other ownership interests having
ordinary voting power) shall be
beneficially owned or controlled,
directly or indirectly, by such
Person;
"Subsidiary(ies)" shall mean a/the subsidiary(ies) of
OSG;
"Syndication Agent" shall have the meaning ascribed
thereto in the preamble;
"Tangible Assets" shall mean, as of the date of
determination thereof, the book value
of assets of OSG and its Recourse
Subsidiaries (less depreciation,
depletion and other properly
deductible valuation reserves) after
deducting Intangible Assets;
"Taxes" shall mean any present or future
income or other taxes, levies, duties,
charges, fees, deductions or
withholdings of any nature now or
hereafter imposed, levied, collected,
withheld or assessed by any taxing
authority whatsoever, except for taxes
on or measured by the overall net
income of any Bank imposed by the
United States of America, the State or
The City of New York or any
governmental subdivision or taxing
authority of any thereof or by any
other taxing authority having
jurisdiction over such Bank (unless
such jurisdiction is asserted solely
by reason of the activities of the
Borrower or any of the Subsidiaries);
"Termination Event" shall mean (i) a "reportable event",
as such term is defined in Section
4043 of ERISA (other than a
"reportable event" not subject to the
provision for 30-day notice to the
PBGC), (ii) the withdrawal of the
Borrower or any ERISA Affiliate from a
Multiple Employer Plan during a plan
year in which it was a "substantial
employer", as such term is defined in
Section 4001(a)(2) of ERISA, or the
incurrence of liability by the
Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the
termination of a Multiple Employer
Plan, (iii) the filing of a notice of
intent to terminate a Plan under
Section 4041 of ERISA or the treatment
of a Multiemployer Plan amendment as a
termination under Section 4041A of
ERISA, (iv) the institution of
proceedings to terminate a Plan or a
Multiemployer Plan or (v) any other
event or condition which might
constitute grounds under Section 4042
of ERISA for the termination of, or
the appointment of a trustee to
administer, any Plan or Multiemployer
Plan;
"Unencumbered Assets" shall mean, as of the date of any
determination thereof, Tangible Assets
(excluding any assets which consist of
shares of stock of Subsidiaries which
have been pledged to secure any
obligations) less the sum of
(i) Attributable Debt and (without
duplication) (ii) the book value of
all assets of OSG and its Recourse
Subsidiaries which are subject to a
Lien securing Secured Debt;
"Unsecured Debt" shall mean, as of the date of any
determination thereof, all Debt of OSG
and its Subsidiaries other than
Secured Debt;
"Unterminated
Voyage Revenues" shall mean, as of the date of any
determination thereof, the amounts
thereof determined in accordance with
GAAP as reflected in the consolidated
financial statements of OSG and its
Recourse Subsidiaries;
"Voting Stock" shall mean, with respect to any
Person, Securities of any class or
classes, the holders of which are
ordinarily, in the absence of
contingencies, entitled to elect a
majority of the corporate directors
(or Persons performing similar
functions) of such Person; and
"Withdrawal Liability" shall have the meaning given to such
term under Part 1 of Subtitle E of
Title IV of ERISA.
1.2 Construction. Words importing the singular number only
shall include the plural and vice versa.
1.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP and all financial statements submitted pursuant to this
Agreement shall be prepared in accordance with, and all financial
data submitted pursuant hereto shall be derived from financial
statements prepared in accordance with, GAAP.
2 THE ADVANCES
------------
2.1 Advances. Each of the Banks, relying upon each of the
representations and warranties set out in Section 7, hereby
severally, and not jointly, agrees with the Borrowers that,
subject to and upon the terms of this Agreement, it will on the
Drawdown Dates from time to time during the Facility Period make
its portion of the Advances available through the Administrative
Agent, to the Borrowers in an aggregate amount not to exceed its
Commitment ratably with the other Banks according to their
respective Commitments. The proceeds of the Advances shall be
utilized for: (i) general corporate purposes, and (ii) to repay
from time to time amounts owing by OSG to the COFR Subsidiary
(the "COFR Advance(s)") up to the COFR Advance Limit. Multiple
Advances may be outstanding at any one time during the Facility
Period, provided, however, that (x) there shall be no more than
ten (10) Advances outstanding at any one time, (y) the aggregate
amount of COFR Advances shall not exceed the COFR Advance Limit,
and (z) no COFR Advance shall be outstanding for more than 364
consecutive days during the Facility Period. Within the limits
of this Section 2.1 and upon the conditions herein provided, the
Borrowers may from time to time borrow pursuant to this
Section 2.1, repay Advances pursuant to Section 4 and reborrow
pursuant to this Section 2.1.
2.2 Drawdown Notice. The Borrowers shall, in respect of
all Advances, serve a written notice (a "Drawdown Notice") on the
Administrative Agent (which shall promptly furnish a copy to each
Bank) (i) for a LIBOR Rate Advance, not later than 11:00 A.M.,
New York City time, at least three (3) Banking Days prior to the
date of the proposed LIBOR Rate Advance, and (ii) for a Base Rate
Advance, not later than 10:00 A.M., New York City time, on the
day of the proposed Base Rate Advance. Each Drawdown Notice
shall specify (a) the date of the proposed borrowing (which shall
be a Banking Day), (b) the principal amount of the Advance to be
made by the Banks on that date, (c) whether such Advance is a
Base Rate Advance or a LIBOR Rate Advance, (d) if a LIBOR Rate
Advance, the Interest Period requested by the Borrowers, (e) the
disbursement instructions for the proceeds of such Advance, (f)
whether such Advance is a COFR Advance, and (g) the name of the
Borrower(s) which will draw down such Advance. Each Drawdown
Notice shall be effective upon receipt by the Administrative
Agent, shall be irrevocable and shall be in the form set out in
Exhibit 5.
2.3 Effect of Drawdown Notice. Each Drawdown Notice shall
be deemed to constitute a warranty by the Borrowers: (a) that
the representations and warranties stated in Section 7 are true
and correct on the date of such Drawdown Notice and will be true
and correct on the applicable Drawdown Date as if made on such
date, and (b) that no Event of Default nor any event which with
the giving of notice or lapse of time or both would constitute an
Event of Default has occurred and is continuing on such Drawdown
Date.
2.4 Funding of Advances. (a) Upon receipt of a Drawdown
Notice, the Administrative Agent shall promptly notify each Bank
of the contents thereof and of such Bank's share of the proposed
Advance.
(b) Not later than 11:00 A.M. (or 1:30 P.M. in the
case of a Base Rate Advance) (New York City time) on the date of
each Advance, each Bank shall (except as provided in subsection
(c) of this Section) make available its share of such Advance, in
Federal or other funds immediately available in New York City, to
the Administrative Agent at its address set forth on Schedule 1.
Unless the Administrative Agent determines that any applicable
condition specified in Section 3.1 or 3.2 has not been satisfied,
the Administrative Agent will make the funds so received from the
Banks available to the Borrowers at the aforesaid address,
subject to the receipt of funds by the Administrative Agent as
provided in the immediately preceding sentence, not later than
2:30 P.M. (New York City time) on the date of such Advance, and
in any event as soon as practicable after receipt.
(c) If any Bank makes a new Advance hereunder to the
Borrowers on a day on which the Borrowers are to repay all or any
part of an outstanding Advance from such Bank, such Bank shall
apply the proceeds of its new Advance to make such repayment and
only an amount equal to the difference (if any) between the
amount being borrowed by the Borrowers and the amount being
repaid shall be made available by such Bank to the Administrative
Agent as provided in subsection (b) of this Section, or remitted
by the Borrowers to the Administrative Agent, as the case may be.
(d) Unless the Administrative Agent shall have
received notice from a Bank prior to the date of any Advance that
such Bank will not make available to the Administrative Agent
such Bank's share of such Advance, the Administrative Agent may
assume that such Bank has made such share available to the
Administrative Agent on the date of such Advance in accordance
with subsections (b) and (c) of this Section 2.4 and the
Administrative Agent may, in reliance upon such assumption, make
available to the Borrowers on such date a corresponding amount.
If and to the extent that such Bank shall not have so made such
share available to the Administrative Agent, such Bank and the
Borrowers (but without duplication) severally agree to repay to
the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date
such amount is repaid to the Administrative Agent, at (i) in the
case of the Borrowers, a rate per annum equal to the higher of
the Federal Funds Rate and the interest rate applicable thereto
pursuant to Section 5.1 and (ii) in the case of such Bank, the
Federal Funds Rate. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Advance included in such
Advance for purposes of this Agreement. Nothing in this
subsection (d) shall be deemed to relieve any Bank of its
obligation to make Loans to the extent provided in this
Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event the Borrowers are required to repay a
LIBOR Rate Advance to the Administrative Agent pursuant to this
Section 2.4(d), the liability for any breakage costs as described
in Section 11.6 shall be borne by the defaulting Bank and not the
Borrowers.
2.5 Notation of Advances. Each Advance made by the Banks
to the Borrowers may be evidenced by a notation of the same made
by the Administrative Agent on the grid attached to the Notes,
which notation, absent manifest error, shall be prima facie
evidence of the amount of the relevant Advance.
2.6 Reduction of the Commitments. Subject to Section 2.9,
the Borrowers may from time to time reduce the Commitments of the
Banks by $25,000,000 or any larger multiple of $5,000,000 upon
three Banking Days' written notice to the Administrative Agent
(which shall promptly notify each Bank). Any such reduction
shall be permanent and irrevocable and pro rata among the Banks,
provided that the amount of the aggregate Commitments after
giving effect to such reduction of the Commitments shall at no
time be less than the aggregate principal amount of all
outstanding Advances.
(b) Upon the occurrence of the Final Payment Date, the
Commitments shall be reduced to zero and any Advances then
outstanding (together with accrued interest thereon) shall be due
and payable on such date.
(c) After the effective date of any reduction pursuant
to Section 2.6(a) hereof, the term "Commitment" shall mean the
Commitments of each Bank in effect immediately prior to such
reduction less the amount of such reduction of the Commitment.
2.7 Mandatory Prepayments. If at any time the principal
amount of outstanding Advances shall exceed the aggregate
Commitments then the Borrowers shall immediately prepay the
Advances in an amount equal to such excess.
2.8 Several Obligations. The failure of any Bank to make
any Advance to be made by it on the date specified therefor shall
not relieve any other Bank of its obligation to make its Advance
on such date, and none of the Agents nor any Bank shall be
responsible for the failure of any other Bank to make an Advance
to be made by such other Bank.
2.9 Pro Rata Treatment. Each borrowing from the Banks
hereunder shall be made from the Banks, each payment of the
Commitment Fee or other fees and expenses under Section 12 hereof
shall be made for account of the Banks, and each termination or
reduction of the amount of the Commitments shall be applied to
the Commitments of the Banks, pro rata according to the amounts
of their respective Commitments; the making, conversion and
continuation of Advances of a particular type shall be made pro
rata among the Banks according to the amounts of their respective
Commitments and the then current Interest Period for each Advance
of such type shall be coterminous; each payment or prepayment of
principal of Advances by the Borrowers shall be made for account
of the Banks pro rata in accordance with the respective unpaid
principal amounts of the Advances held by the Banks; and each
payment of interest on Advances by the Borrowers shall be made
for the account of the Banks pro rata in accordance with the
amounts of interest due and payable to the respective Banks.
3 CONDITIONS
----------
3.1 Conditions Precedent to Availability of the Facility.
The obligation of the Banks to make the Facility available to the
Borrowers under this Agreement shall be expressly subject to the
following conditions precedent:
(a) the Administrative Agent shall have received the
following documents in form and substance satisfactory to the
Administrative Agent and its legal advisers:
(i) copies, certified as true and
complete by an officer of each of the Borrowers,
of the resolutions of its board of directors
evidencing approval of this Agreement and the
Notes and authorizing an appropriate officer or
officers or attorney-in-fact or attorneys-in-fact
to execute the same on its behalf;
(ii) copies, certified as true and
complete by an officer of each of the Borrowers or
other applicable party, of all documents
evidencing any other necessary action (including
actions by such parties thereto other than the
Borrowers as may be required by the Banks),
approvals or consents with respect to this
Agreement and the Notes and the transactions
contemplated hereby and thereby;
(iii) copies, certified as true and
complete by an officer of each of the Borrowers,
of the certificate or articles of incorporation
and by-laws or similar constituent document
thereof;
(iv) a good standing certificate of each
of the Borrowers;
(v) a certificate signed by the
President, Treasurer, Comptroller, Controller or
chief financial officer of each of the Borrowers
to the effect that (A) no Default (as defined in
the Existing Agreement) and no Event of Default
(as defined herein) shall have occurred and be
continuing and (B) the representations and
warranties of the Borrowers contained in this
Agreement are true and correct as of the date of
such certificate.
(b) the Borrowers shall have duly executed and
delivered this Agreement and the Notes to the Administrative
Agent;
(c) the Administrative Agent shall have received
executed counterparts of this Agreement from each of the Banks
and the Agents (or, in the case of any Bank as to which an
executed counterpart shall not have been received, the
Administrative Agent shall have received in form satisfactory to
it a telex, facsimile or other written confirmation from such
Bank of the execution of a counterpart of this Agreement by such
Bank);
(d) the Creditors shall have received payment in full
of all fees and expenses due to each thereof pursuant to the
terms hereof on the date when due including, without limitation,
all fees and expenses due under Section 12 of this Agreement;
(e) the Banks shall be satisfied that none of the
Borrowers nor any Subsidiary is subject to any Environmental
Claim which could reasonably be expected to result in a Material
Adverse Change;
(f) the Administrative Agent shall have received
opinions addressed to the Agents and the Banks from (i) Proskauer
Rose LLP, special counsel to the Borrowers, (ii) Robert N. Cowen,
Esq., Senior Vice President and Secretary to OSG and counsel to
OSG and OSG Bulk, (iii) Mark A. Lowe, Esq., counsel to OSG
International, and (iv) Seward & Kissel, special counsel to the
Agents in such form as the Agents may agree, as well as such
other legal opinions as the Banks shall have required as to all
or any matters under the laws of the State of Delaware, the
United States of America and the State of New York covering the
conditions and representations and warranties which are the
subjects of Sections 3 and 7, respectively;
(g) the Administrative Agent shall have received a
duly executed copy of the acceptance by North American Ship
Agencies, Inc. of its appointment as agent for service of process
for OSG International;
(h) the Administrative Agent shall have received a
certificate signed by the President or chief financial officer of
OSG certifying that the principal amount of, and accrued interest
on, all outstanding loans under the Existing Agreement and the
COFR Facility and all other amounts payable by OSG and its
Subsidiaries thereunder shall have been paid in full, the
commitment of each bank or other lender thereunder shall have
been terminated (it being understood that satisfaction of this
condition may occur simultaneously with the first Drawdown
hereunder if all other conditions contained in this Section 3.1
and in Section 3.2 are first satisfied); and
(i) receipt by the Administrative Agent of evidence
satisfactory to it of the existence and effectiveness of the
insurance required to be maintained by OSG, its Subsidiaries and
its Joint Ventures pursuant to Section 8.1(A)(xii).
3.2 Further Conditions Precedent. The obligation of the
Banks to make an Advance available to the Borrowers shall be
expressly and separately from the foregoing conditional upon, on
each Drawdown Date:
(a) the Administrative Agent having received a
Drawdown Notice in accordance with the terms of Section 2.2;
(b) the representations stated in Section 7 being true
and correct as if made on that date; provided, however, that (i)
the representations and warranties set forth in Section 7.1(e)
and (o) shall be deemed inapplicable on such date if such Advance
would not result in an incremental increase in the aggregate
amount of Advances outstanding under the Facility and (ii) any
representation and warranty which relates solely to an earlier
date shall be true and accurate on and as of such earlier date;
(c) no Event of Default having occurred and being
continuing and no event having occurred and being continuing
which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default; and
(d) there having been no Material Adverse Change
since December 31, 1996; provided, however, that this condition
shall not apply to any Advance which would not result in an
incremental increase in the aggregate amount of Advances
outstanding under the Facility.
3.3 Satisfaction after Drawdown. Without prejudice to any
of the other terms and conditions of this Agreement, in the event
all of the Banks elect, in their sole discretion, to make an
Advance prior to the satisfaction of all or any of the conditions
referred to in Sections 3.1 and 3.2, the Borrowers hereby
covenant and undertake to satisfy or procure the satisfaction of
such condition or conditions within seven (7) days after the
Drawdown Date (or such longer period as the Majority Banks, in
their sole discretion, may agree).
4 REPAYMENT AND PREPAYMENT
------------------------
4.1 Repayment. Each Borrower severally, and not jointly,
agrees to repay to the Banks the principal of each LIBOR Rate
Advance made to such Borrower on the last day of the Interest
Period therefor and any then outstanding principal of any and all
of the LIBOR Rate Advances and Base Rate Advances made to such
Borrower on the Final Payment Date; provided, however, that any
COFR Advance made to any Borrower shall be due and payable on the
earlier of (i) the Final Payment Date and (ii) the date which is
364 days from and after the Drawdown Date with respect to such
COFR Advance.
4.2 Prepayment. Subject to the provisions of Section 11.6
in the case of the prepayment of any LIBOR Rate Advance on any
day other than the last day of the Interest Period with respect
to such LIBOR Rate Advance, the Borrowers may, at their option,
without penalty or premium, on any Banking Day, prepay all or any
portion of the principal of any Advance; provided, that any such
prepayment shall be an integral multiple of $1,000,000 with a
minimum amount of $10,000,000. The Borrowers shall deliver to
the Administrative Agent (which shall promptly furnish a copy to
each Bank) notice of such prepayment on not less than three (3)
Banking Days with respect to each LIBOR Rate Advance and one (1)
Banking Day with respect to each Base Rate Advance (which notice
shall be irrevocable and shall specify the date and amount of
prepayment).
4.3 Optional Conversions. Subject to Section 2.9, the
Borrowers may, at their option, (i) on the last day of any
Interest Period, convert a LIBOR Rate Advance into a Base Rate
Advance, (ii) on the last day of any Interest Period, continue a
LIBOR Rate Advance as a LIBOR Rate Advance, and (iii) on any
Banking Day, convert a Base Rate Advance into a LIBOR Rate
Advance; provided, that, except as otherwise provided in this
Agreement to the contrary, the Borrowers shall deliver to the
Administrative Agent (which will promptly send a copy to each
Bank) a Notice of Conversion or Continuation by 11:00 A.M., New
York City time, (A) in the case of clauses (ii) and (iii) above,
not less than three Banking Days prior to the date of each such
conversion or continuation, and (B) in the case of clause (i)
above, on or prior to the date of such conversion. Each Notice
of Conversion or Continuation shall specify (x) the amount of
each Advance to be continued or converted, (y) the date of such
continuation or conversion, and (z) the type of Advance to be
continued or converted (and in the case of a conversion, the type
of Advance to result from such conversion and, if such Advance is
to be converted into a LIBOR Rate Advance, the Interest Period).
4.4 Borrowers' Obligations Absolute. The Borrowers'
obligations to pay each Creditor hereunder and under the Notes
shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms hereof and thereof,
under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrowers or any of
them may have or have had against the Creditors.
5 INTEREST AND RATE
-----------------
5.1 Payment of Interest; Interest Rate. (a) Each Borrower
hereby promises to pay to the Banks interest on the unpaid
principal amount of each Advance made to such Borrower for the
period commencing on the date of such Advance until but not
including the stated maturity thereof (whether by acceleration or
otherwise) or the date of prepayment thereof (i) during the
periods such Advance is a Base Rate Advance, at the Base Rate,
and (ii) during the periods such Advance is a LIBOR Rate Advance,
at the LIBOR Rate plus the Applicable Margin per annum; provided,
however, that after the occurrence and during the continuance of
an Event of Default, all outstanding Advances shall bear interest
at the Default Rate.
(b) Notwithstanding the foregoing, each Borrower
hereby promises to pay interest on any Advance made to such
Borrower or any installment thereof and (to the extent that the
payment of such interest shall be legally enforceable) on any
overdue installment of interest, and on any other amount payable
by such Borrower hereunder which shall not be paid in full when
due (whether at stated maturity, by acceleration or otherwise),
for the period commencing on the due date thereof until but not
including the date the same is paid in full at the Default Rate.
(c) Except as provided in the next sentence, accrued
interest on each Advance shall be payable (x) in respect of each
Base Rate Advance, quarterly, on the last Banking Day of each
calendar quarter, (y) in respect of each LIBOR Rate Advance on
the last day of each Interest Period, except that if the
Borrowers shall select an Interest Period in excess of three (3)
months, accrued interest shall be payable during such Interest
Period on each three (3) month anniversary of the commencement of
such Interest Period and upon the last day of such Interest
Period, and (z) in the case of all Advances together with each
repayment of principal thereof. Interest payable at the Default
Rate shall be payable from time to time on demand of the
Administrative Agent.
5.2 Calculation of Interest. All interest shall accrue
from day-to-day and be calculated on the actual number of days
elapsed and on the basis of a three hundred sixty (360) day year
with respect to each LIBOR Rate Advance and on the basis of a
365/366 day year with respect to each Base Rate Advance.
5.3 Maximum Interest. Anything in this Agreement or the
Notes to the contrary notwithstanding, the interest rate on any
Advance shall in no event be in excess of the maximum rate
permitted by applicable law.
6 PAYMENTS
--------
6.1 Place of Payments, No Set Off. All payments to be made
hereunder by the Borrowers shall be made in Dollars on the due
dates of such payments to the Administrative Agent at its office
located at 399 Park Avenue, New York, New York 10043 or to such
other branch of the Administrative Agent as the Administrative
Agent may direct, without set-off or counterclaim and free from,
clear of and without deduction for, any Taxes; provided, however,
that if the Borrowers shall at any time be compelled by law to
withhold or deduct any Taxes from any amounts payable to the
Administrative Agent for the account of the Banks or the other
Creditors hereunder, then, the Borrowers shall pay such
additional amounts as may be necessary in order that the net
amounts received after withholding or deduction shall equal the
amounts which would have been received if such withholding or
deduction were not required and, in the event any withholding or
deduction is made, whether for Taxes or otherwise, the Borrowers
shall promptly send to the Administrative Agent any documentary
evidence they have with respect to such withholding or deduction.
6.2 Federal Income Tax Credits. (a) If any Bank obtains
the benefit of a credit against its liability for federal income
taxes imposed by the United States of America for all or part of
the Taxes as to which the Borrowers have paid additional amounts
as aforesaid then such Bank shall reimburse the Borrowers for the
amount of the credit so obtained; (b) each of the Banks that is
not a United States Person (as such term is defined in Section
7701(a)(30) of the Code) shall, on or prior to the first Drawdown
Date (and in the case of an assignee, on or prior to the
effective date of the relevant assignment) and from time to time
thereafter when required by applicable provisions of the Code,
provide the Borrowers with two duly completed copies of Internal
Revenue Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income
tax treaty to which the United States is a party that exempts
withholding tax on payments under this Agreement or the Notes or
certifying that the income receivable by it pursuant to this
Agreement or the Notes is effectively connected with the conduct
of a trade or business in the United States; (c) for any period
with respect to which a Bank that is not a United States Person
has failed to provide the Borrowers with the appropriate forms
described in clause (b) above (other than if such failure is due
to a change in law occurring after the date on which such person
was originally required to provide such forms, or if such forms
are otherwise not required under clause (b) above), such Bank
shall not be entitled to payment of additional amounts under
Section 6.1 above with respect to Federal Taxes imposed by the
United States; provided, however, that should a Bank become
subject to Taxes because of its failure to deliver a form
required hereunder, the Borrowers shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such
Taxes if, in the judgment of the Borrowers such steps would avoid
the need for, or reduce the amount of, any Taxes required to be
deducted from or in respect of any sum payable hereunder to such
Bank and would not, in the judgment of the Borrowers, be
disadvantageous to the Borrowers.
6.3 Sharing of Setoffs. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or
counterclaim or pursuant to a secured claim under Section 506 of
the Federal Bankruptcy Code or other security or interest arising
from, or in lieu of, such secured claim, exercised or received by
such Bank under any applicable bankruptcy, insolvency or other
similar law or otherwise, or by any other means, obtain payment
(voluntary or involuntary) in respect of any Advance or Advances
as a result of which the unpaid principal portion of its Advances
(and accrued and unpaid interest thereon) shall be
proportionately less than the unpaid principal portion of the
Advances (and accrued and unpaid interest thereon) of any other
Bank, it shall be deemed simultaneously to have purchased from
such other Bank at face value, and shall promptly pay to such
other Bank the purchase price for, a participation in the
Advances of such other Bank so that the aggregate unpaid
principal amount of the Advances (and accrued and unpaid interest
thereon) and participations in the Advances held by each Bank
shall be in the same proportion to the aggregate unpaid principal
amount of all Advances then outstanding as the principal amount
of its Advances (and accrued and unpaid interest thereon) prior
to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all Advances
outstanding (and accrued and unpaid interest thereon) prior to
such exercise of banker's lien, setoff or counterclaim or other
event; provided, however, that, if any such purchase or purchases
or adjustments shall be made pursuant to this Section 6.3 and the
payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or
adjustment restored without interest. Any Bank holding a
participation in an Advance deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing to such
Bank by reason thereof as fully as if such Bank had made an
Advance in the amount of such participation. The Borrowers
expressly consent to the foregoing arrangement.
7 REPRESENTATIONS AND WARRANTIES
------------------------------
7.1 In order to induce the Creditors to enter into this
Agreement and to make the Facility available, the Borrowers
hereby, jointly and severally, represent and warrant to the Banks
(which representations and warranties shall survive the execution
and delivery of this Agreement and the Notes and the drawdown of
the Facility) that:
(a) Due Organization and Power. Each of the Borrowers
is a corporation duly formed and validly existing in good
standing under the laws of its jurisdiction of incorporation and
is duly qualified and is authorized to do business as a foreign
corporation in each jurisdiction wherein the nature of the
business transacted thereby makes such qualification necessary,
except where failure to so qualify would not result in a Material
Adverse Change, has full power to carry on its business as now
being conducted and to enter into and perform its obligations
under this Agreement and its Note, and has complied with all
statutory, regulatory and other requirements relative to such
business and such agreements the noncompliance with which could
reasonably be expected to result in a Material Adverse Change.
(b) Authorization and Consents. All necessary
corporate action has been taken to authorize, and all necessary
consents and authorities have been obtained and remain in full
force and effect to permit, each of the Borrowers to enter into
and perform its obligations under this Agreement and its Note and
to borrow, service and repay the Advances and, as of the date of
this Agreement, no further consents or authorities are necessary
for the service and repayment of the Advances or any part
thereof.
(c) Binding Obligations. Each of this Agreement and
the Note to which such Borrower is a party constitutes a legal,
valid and binding obligation of such Borrower enforceable against
such Borrower in accordance with its terms.
(d) No Violation. The execution and delivery of, and
the performance of the provisions of, this Agreement or the Notes
by the Borrowers do not, and will not during the Facility Period,
contravene any applicable law or regulation or any contractual
restriction binding thereon or the Articles or Certificate of
Incorporation or By-laws or similar constituent documents of the
Borrowers.
(e) Litigation. No action, suit or proceeding is
pending or threatened against OSG or any of its Subsidiaries
before any court, board of arbitration or administrative agency
which could be reasonably expected to result in any Material
Adverse Change or which in any manner draws into question the
validity or enforceability of this Agreement or the Notes.
(f) No Default. Except as otherwise disclosed in
writing to the Banks on or prior to the date hereof, neither OSG
nor any of the Subsidiaries is in default under any material
agreement by which it is bound.
(g) Compliance with ERISA. Neither any member of the
ERISA Group nor any ERISA Affiliate, individually or
collectively, has incurred, or reasonably expects to incur,
Withdrawal Liabilities or liabilities upon the happening of a
Termination Event the aggregate of which for all such Withdrawal
Liabilities and other liabilities exceeds or would exceed
$30,000,000. With respect to any Plan, neither OSG nor any ERISA
Affiliate is aware of or has been notified that any "variance"
from the "minimum funding standard" has been requested (each such
term as defined in Part 3, Subtitle B, of Title 1 of ERISA). No
member of the ERISA Group nor any ERISA Affiliate has received
any notice that any Multiemployer Plan is in reorganization,
within the meaning of Title IV of ERISA, which reorganization
could result in a Material Adverse Change.
(h) Environmental Matters. Except as heretofore
disclosed in writing to the Administrative Agent (i) OSG and each
of its Subsidiaries will, when required, be in compliance with
all applicable United States federal and state, local, foreign
and international laws, regulations, conventions and agreements
relating to pollution prevention or protection of human health or
the environment (including, without limitation, ambient air,
surface water, ground water, navigable waters, waters of the
contiguous zone, ocean waters and international waters),
including, without limitation, laws, regulations, conventions and
agreements relating to (1) emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous materials, oil, hazardous
substances, petroleum and petroleum products and by-products
("Materials of Environmental Concern"), or (2) the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern
("Environmental Laws") (except, as to all of the above, where the
failure to do so would not be reasonably likely to result in a
Material Adverse Change); (ii) each of OSG and its vessel-owning
Subsidiaries will, when required, have all permits, licenses,
approvals, rulings, variances, exemptions, clearances, consents
or other authorizations required under applicable Environmental
Laws ("Environmental Approvals") and will, when required, be in
compliance with all Environmental Approvals required to operate
its business as then being conducted (except where the failure to
comply with, obtain or renew such permits, licenses, rulings,
variances, exemptions, clearances, consents or other
authorizations would not be reasonably likely to result in a
Material Adverse Change); and (iii) neither OSG nor any of its
vessel-owning Subsidiaries has received any notice of any claim,
action, cause of action, investigation or demand by any Person,
entity, enterprise or government, or any political subdivision,
intergovernmental body or agency, department or instrumentality
thereof, alleging potential liability which would reasonably be
likely to result in a Material Adverse Change, or a requirement
to incur, investigatory costs, cleanup costs, response and/or
remedial costs (whether incurred by a governmental entity or
otherwise), natural resources damages, property damages, personal
injuries, attorneys' fees and expenses, or fines or penalties
which would reasonably be likely to result in a Material Adverse
Change, in each case arising out of, based on or resulting from
(1) the presence, or release or threat of release into the
environment, of any Materials of Environmental Concern at any
location, whether or not owned by OSG or any of its Subsidiaries,
or (2) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law or Environmental
Approval ("Environmental Claim") (other than Environmental Claims
that have been fully and finally adjudicated or otherwise
determined and all fines, penalties and other costs, if any,
payable by OSG or any of its vessel-owning Subsidiaries in
respect thereof have been paid in full or which are fully covered
by insurance (including permitted deductibles)).
(i) Subsidiaries. (1) Each of OSG's Material
Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted; and (2) there
are no Non-Recourse Subsidiaries as of the date hereof.
(j) Financial Statements. Each of (i) the audited
consolidated balance sheet of OSG and its Subsidiaries as at
December 31, 1996 and the related audited consolidated statements
of operations and retained earnings and cash flows for the fiscal
year then ended reported on by Ernst & Young, LLP and included in
OSG's 1996 Form 10-K, and (ii) the unaudited condensed
consolidated balance sheet of OSG and its Subsidiaries as of
March 31, 1997 and the related unaudited condensed statements of
operations and retained earnings and cash flows for the period
then ended, set forth in OSG's report for the fiscal quarter then
ended, as filed with the Securities and Exchange Commission on
Form 10-Q, copies of all of which have been furnished to each
Bank, fairly present, in all material respects, the consolidated
financial condition of OSG and its Subsidiaries as at such dates
and the consolidated results of the operations of OSG and its
Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, subject in the case of clause (ii) to
normal year-end audit adjustments, to the absence of footnotes
and certain information being in condensed form.
(k) Tax Returns and Payments. United States Federal
income tax returns of OSG and its Subsidiaries have been examined
and closed through the fiscal year ended December 31, 1986. OSG
and its Subsidiaries have filed all United States Federal income
tax returns and all other material tax returns which are required
to be filed by them and have paid all material taxes due pursuant
to such returns or pursuant to any assessment received by OSG or
any Subsidiary of OSG, other than taxes which are being contested
in good faith by appropriate proceedings. The charges, accruals
and reserves on the books of OSG and its Subsidiaries in respect
of taxes are, in the opinion of OSG, adequate in all material
respects.
(l) Insurance. Each of OSG and the Subsidiaries has
insured its properties and assets against such risks and in such
amounts as are customary for companies engaged in similar
businesses.
(m) Foreign Trade Control Regulations. None of the
transactions contemplated herein will violate any of the
provisions of the Foreign Assets Control Regulations of the
United States of America (Title 31, Code of Federal Regulations,
Chapter V, Part 500, as amended), any of the provisions of the
Cuban Assets Control Regulations of the United States of America
(Title 31, Code of Federal Regulations, Chapter V, Part 515, as
amended), any of the provisions of the Libyan Assets Control
Regulations of the United States of America (Title 31, Code of
Federal Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iraqi Sanctions Regulations (Title 31, Code of
Federal Regulations, Chapter V, Part 575, as amended), any of the
provisions of the Federal Republic of Yugoslavia (Serbia and
Montenegro) Assets Control Regulations (Title 31, Code of Federal
Regulations, Chapter V, Part 585 as amended) or any of the
provisions of the Regulations of the United States of America
Governing Transactions in Foreign Shipping of Merchandise
(Title 31, Code of Federal Regulations, Chapter V, Part 505, as
amended).
(n) Not an Investment Company. Neither OSG nor any of
the Subsidiaries is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(o) No Material Adverse Change. Since December 31,
1996, there has been no Material Adverse Change.
8 COVENANTS
---------
8.1 Each of the Borrowers hereby covenants and undertakes
with each of the Banks that, from the date hereof and so long as
the Commitments are in effect or any principal, interest or other
moneys are owing in respect of the Facility or otherwise owing
under this Agreement or the Notes or any of them:
A. Such Borrower will:
(i) Performance of Agreements. Duly
perform and observe the terms of this Agreement
and its Note;
(ii) Notice of Default. Promptly inform
the Administrative Agent (which shall promptly
notify the Banks) of the occurrence of (a) any
Event of Default or of any event which with the
giving of notice or lapse of time, or both, would
constitute an Event of Default, (b) any litigation
or governmental proceeding pending or threatened
against OSG or any Subsidiary which in any manner
draws into question the validity or enforceability
of this Agreement or its Note or which could
reasonably be expected to result in a Material
Adverse Change and (c) any other event or
condition of which they become aware which is
reasonably likely to result in a Material Adverse
Change;
(iii) Obtain Consents. Without
prejudice to Section 7.1 and this Section 8.1,
obtain every consent and do all other acts and
things which may from time to time be necessary
for the continued due performance of all its
obligations under this Agreement and its Note;
(iv) Financial Statements. Deliver to
the Administrative Agent with sufficient copies
for the Banks:
(a) as soon as available and in any
event within 120 days after the end of each fiscal
year of OSG, (I) a consolidated balance sheet of
OSG and its Subsidiaries as of the end of such
fiscal year and the related consolidated
statements of income and retained earnings and
cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the
previous fiscal year, complying in all material
respects with all applicable rules and regulations
promulgated by the Securities and Exchange
Commission, all reported on by Ernst & Young, LLP
or other independent public accountants of
nationally recognized standing and (II) if there
are any Non-Recourse Subsidiaries, an unaudited
consolidated balance sheet of OSG and its Recourse
Subsidiaries as of the end of such fiscal year and
the related unaudited consolidated statements of
income and retained earnings and cash flows for
such fiscal year, setting forth in each case in
comparative form the figures for the previous
fiscal year, together with a letter from the
independent public accountants referred to in the
foregoing clause (I) confirming the mathematical
accuracy of such financial statements and the
derivation thereof on a reasonable basis from the
audited financial statements referred to in clause
(I);
(b) as soon as available and in any
event within 60 days after the end of each of the
first three fiscal quarters of each fiscal year of
OSG (I) an unaudited consolidated balance sheet of
OSG and its Subsidiaries as of the end of such
fiscal quarter and the related unaudited
consolidated statements of income and retained
earnings and cash flows for such fiscal quarter
and for the portion of OSG's fiscal year ended at
the end of such fiscal quarter, setting forth in
each case in comparative form the figures for the
corresponding fiscal quarter and the corresponding
portion of OSG's previous fiscal year, all
certified (subject to normal year-end adjustments)
as to fairness of presentation and compliance in
all material respects with all applicable rules
and regulations of the Securities and Exchange
Commission with respect to interim financial
statements and consistency by the chief financial
officer or the chief accounting officer of OSG and
(II) if there are any Non-Recourse Subsidiaries,
an unaudited consolidated balance sheet of the
Borrower and its Recourse Subsidiaries as of the
end of such fiscal quarter and the related
unaudited consolidated statements of income and
retained earnings and cash flows for such fiscal
quarter and for the portion of OSG's fiscal year
ended at the end of such fiscal quarter, setting
forth in each case in comparative form the figures
for the corresponding fiscal quarter and the
corresponding portion of OSG's previous fiscal
year, together with a certificate of the chief
financial officer or chief accounting officer of
OSG as to the derivation of such financial
statements from the financial statements referred
to in clause (I) of this subsection (b);
(c) simultaneously with the delivery of
each set of financial statements referred to in
clauses (a)(I) and (b)(I) above, (i) a certificate
of OSG executed by OSG's chief financial officer
or chief accounting officer setting forth in
reasonable detail the calculations required to
establish whether the covenants set forth in
Sections 8.1(A)(xv), (xvi), (xvii) and (xviii) and
8.1(B)(iii) and (viii) of this Agreement were
complied with on the date of such financial
statements, and (ii) a certificate of each of the
Borrowers executed by each such Borrower's chief
financial officer or chief accounting officer
stating whether any Event of Default exists on the
date of such certificate and, if any Event of
Default then exists, setting forth the details
thereof and the action which the Borrowers are
taking or propose to take with respect thereto;
(d) simultaneously with the delivery of
each set of financial statements referred to in
clause (a)(I) above, a statement of the firm of
independent public accountants which reported on
such statements (I) stating whether anything has
come to their attention to cause them to believe
that OSG and its Subsidiaries were not in
compliance with any of the covenants set forth in
Sections 8.1(A)(xv), (xvi), (xvii) and (xviii) and
8.1(B)(iii) and (viii) of this Agreement on the
date of such statements and (II) confirming the
calculations set forth in the officers certificate
delivered simultaneously therewith pursuant to
subsection (c) above or, with respect to the
calculations required to derive the amount
referred to in the covenants set forth in Section
8.1(A)(xv) through (xvii), verifying the
mathematical accuracy of such calculations and
comparing Consolidated Net Income for each of the
relevant fiscal quarters with the consolidated
income statement of OSG and its Recourse
Subsidiaries for such fiscal quarter;
(e) within three Banking Days after the
date on which any executive officer of any of the
Borrowers obtains knowledge of (I) any Event of
Default, if such Event of Default is then
continuing or, (II) a Material Adverse Change or
any action, suit or proceeding of the type
referred to in Section 7.1(e), a certificate of
the chief financial officer or the chief
accounting officer of each of the Borrowers
setting forth the details thereof and the action
which the Borrowers are taking or proposes to take
with respect thereto;
(f) promptly upon the mailing thereof
to the shareholders of OSG generally, copies of
all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof,
copies of all registration statements (other than
the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which OSG shall have filed with the
Securities and Exchange Commission;
(h) as soon as possible, (i) copies of
all reports and notices which OSG or any of its
Subsidiaries files under ERISA with the Internal
Revenue Service or the Pension Benefit Guaranty
Corporation ("PBGC") or the U.S. Department of
Labor or the sponsor of a Multiemployer Plan or
which OSG or any of its Subsidiaries receives from
the PBGC or the sponsor of a Multiemployer Plan
relating to (a) any Termination Event and (b) with
respect to a Multiemployer Plan, any Withdrawal
Liability, or any actual or expected
reorganization (within the meaning of Title IV of
ERISA), any termination of a Multiemployer Plan
(within the meaning of Title IV of ERISA) and (ii)
a certificate of the chief financial officer or
chief accounting officer of OSG setting forth in
reasonable detail the calculation of the amount
(to the extent then reasonably determinable) of
any liability in connection with the foregoing;
(i) promptly after any officer of any
of the Borrowers becomes aware of any change in
the rating by Moody's or S&P of OSG's publicly-
traded senior unsecured long-term debt securities,
notice of such change;
(j) in the event of any change in OSG's
fiscal year, OSG shall upon the request of the
Administrative Agent and as soon as practicable,
restate such of its consolidated financial
statements required to be delivered under this
Section 8.1(A)(iv) for such twelve month period as
shall be necessary in order to permit the
calculation of the financial covenants set forth
in this Agreement; and
(k) from time to time such additional
information regarding the financial position,
results of operations, business or prospects of
OSG and its Subsidiaries as the Administrative
Agent, at the request of any Bank, may reasonably
request.
(v) Corporate Existence. Do or cause
to be done all things necessary to preserve and
keep in full force and effect the Borrowers' and
each of the Material Subsidiaries' corporate
existence, and all licenses, franchises, permits
and assets necessary to the conduct of the
business of OSG and the Subsidiaries;
(vi) Books, Records, etc. Keep proper
books and records throughout the Facility Period;
(vii) Inspection. Allow any
representative or representatives designated by
any Bank, at the risk and expense of such Bank and
during normal business hours, subject to
applicable laws and regulations, to visit and
inspect any of the Borrower's or Subsidiary's,
and, on request, to examine the Borrowers' and
Subsidiaries' books of account, records, reports
and other papers (and to make copies thereof and
to take extracts therefrom) and to discuss its
affairs; finances and accounts with the Borrowers'
and Subsidiaries' officers and executive employees
all at such reasonable times and as often as such
Bank reasonably requests;
(viii) Payment of Obligations. Pay
and discharge, or cause to be paid and discharged,
and will cause each of its Subsidiaries to pay and
discharge, at or before maturity, all their
respective material obligations and liabilities,
including, without limitation, all taxes,
assessments and governmental charges or levies
imposed upon them, the Subsidiaries or their
respective income or property prior to the date
upon which penalties attach thereto; provided,
however, that they shall not be required to pay
and discharge, or cause to be paid and discharged,
any such obligation, liability, tax, assessment,
charge or levy so long as the legality thereof
shall be contested in good faith and by
appropriate proceedings or other acts and they or
the relevant Subsidiary or Subsidiaries shall
maintain in accordance with GAAP appropriate
reserves with respect thereto;
(ix) Compliance with Statutes, etc. Do
or cause to be done all things necessary to comply
with all laws, and the rules and regulations
thereunder, applicable to the Borrowers or any of
the Subsidiaries including, without limitation,
those laws, rules and regulations relating to
employee benefit plans and environmental matters
except where the failure to do so could not be
reasonably likely to result in a Material Adverse
Change;
(x) Environmental Matters. Promptly
upon the occurrence of any of the following
conditions, provide to the Administrative Agent
(which shall promptly furnish a copy thereof to
each Bank) a certificate of an executive officer
of each of the Borrowers, specifying in detail the
nature of such condition and their proposed
response or the response of their Environmental
Affiliate (as hereinafter defined): (a) its
receipt or the receipt by any of the Subsidiaries
or any of their Environmental Affiliates of any
communication whatsoever that alleges that such
Person is not in compliance with any applicable
Environmental Law or Environmental Approval, if
such noncompliance could reasonably be expected to
result in a Material Adverse Change, (b) knowledge
by them, any of the Subsidiaries or any of their
Environmental Affiliates that there exists any
Environmental Claim pending or threatened against
any such Person, which could reasonably be
expected to result in a Material Adverse Change,
or (c) any release, emission, discharge or
disposal of any material that could form the basis
of any Environmental Claim against them, any of
the Subsidiaries or any of their Environmental
Affiliates if such Environmental Claim could
reasonably be expected to result in a Material
Adverse Change. Upon the written request by the
Administrative Agent, they will submit to the
Banks at reasonable intervals, a report providing
an update of the status of any issue or claim
identified in any notice or certificate required
pursuant to this subsection. For the purposes of
this subsection, "Environmental Claim" shall mean
any claim under federal, state and local
environmental, health and safety laws, statutes or
regulations. "Environmental Affiliate" shall mean
any Person or entity the liability of which for
Environmental Claims OSG or any of the
Subsidiaries may have assumed by contract or
operation of law;
(xi) Maintenance of Assets. Maintain
and keep, and procure that each of the
Subsidiaries shall maintain and keep, all
properties used or useful in the conduct of their
respective business in good condition, repair and
working order (ordinary wear and tear excepted)
and supplied with all necessary equipment and will
make, or cause to be made, all necessary repairs,
renewals and replacements thereof so that the
business carried on in connection therewith and
every material portion thereof may be properly
conducted at all times except where the failure to
do so would not be reasonably likely to result in
a Material Adverse Change;
(xii) Insurance. Maintain, and
cause each of their Subsidiaries to maintain, with
financially sound and reputable insurance
companies (which may include protection and
indemnity clubs) (i) in the case of OSG or any
Subsidiary which engages in any oil or oil-related
business (including any business in products
related to oil), including without limitation,
owning, leasing or chartering any ship engaged in
the transport of oil or related products, oil
pollution insurance covering risks in amounts up
to and including $700,000,000 or, if such
insurance is not available at reasonable cost
after taking into account the level of exposure to
which OSG and its Subsidiaries may be subject,
such other amount as is usually insured against by
companies of established repute engaged in the
same or similar business from time to time and
(ii) such other insurance on all their respective
properties and against all such risks in at least
such amounts as are usually insured against by
companies of established repute engaged in the
same or similar business from time to time;
(xiii) Shipping Management. At all
times cause not less than 66 2/3% of the
Consolidated Net Tangible Assets to be managed by
OSG, any Subsidiary of OSG, the Shipping Manager,
any subsidiary of the Shipping Manager, one or
more other shipping management companies
reasonably acceptable to the Majority Banks or any
combination of the foregoing;
(xiv) Agent for Service of Process.
OSG shall cause OSG International to maintain at
all times North American Ship Agencies, Inc. or
another agent acceptable to the Majority Banks as
its agent for service of process in the State of
New York and shall cause any other such agent to
execute and deliver to OSG and the Administrative
Agent a letter accepting such agency, prior to or
concurrently with such other agent's acceptance of
its appointment as agent for service of process
for OSG International;
(xv) Consolidated Tangible Net Worth.
At all times maintain Consolidated Tangible Net
Worth at an amount not less than $600,000,000,
plus 50% of Consolidated Net Income (to the extent
positive) for each quarter from and after December
31, 1996;
(xvi) Cash Adjusted Debt Service
Coverage Ratio. At all times maintain a Cash
Adjusted Debt Service Coverage Ratio measured as
of the end of each fiscal quarter for the period
of four consecutive fiscal quarters ended on that
date (taken as a single accounting period) of not
less than 1.75 to 1;
(xvii) Unencumbered Assets to
Unsecured Debt Ratio. At all times maintain a
ratio of Unencumbered Assets to Unsecured Debt of
not less than 1.50 to 1; and
(xviii) Cash Adjusted Funded Debt to
Cash Adjusted Consolidated Net Tangible Assets.
At all times maintain a ratio of Cash Adjusted
Funded Debt to Cash Adjusted Consolidated Net
Tangible Assets of not more than .60 to 1.
(xix) Security Interest on Change of
Control. (a) If the Agents and the Majority Banks
unanimously shall have determined in their
reasonable judgment that (i) a change in control
of OSG has occurred and (ii) such change in
control is materially detrimental to OSG and its
Subsidiaries, considered as a whole, then OSG
shall, or shall cause one or more of its
Subsidiaries to, not later than the 90th day after
receipt of notice by OSG from the Administrative
Agent of such determination (or, if such day is
not a Banking Day, the next succeeding Banking
Day), (x) grant a security interest in, pledge,
assign or mortgage, pursuant to one or more
agreements or other instruments to which OSG (and
any relevant Subsidiary) is a party (collectively,
the "Security Documents"), assets of OSG or any
Subsidiary (the "Collateral") to or in favor of
the Administrative Agent for the benefit of the
Banks as collateral for the Advances made or to be
made hereunder, such assets to be subject to no
other Liens (other than Liens arising in the
ordinary course of business which (A) do not
secure Debt and (B) do not, individually or in the
aggregate, materially detract from the value of
the Collateral as collateral hereunder) and to
have an aggregate fair market value (taking into
account such Liens) at least equal to 130% of the
sum of the aggregate principal amount of all
Advances outstanding on such 90th day (or next
succeeding Banking Day), (y) provide to the
Administrative Agent one or more opinions of
counsel, the form and substance of each such
opinion and such counsel to be reasonably
satisfactory to the Administrative Agent, as to
the creation, validity, effectiveness, perfection
and priority of such security interests, pledges,
assignments and mortgages, compliance with
Regulation U, the absence of any fraudulent
conveyance or transfer and such other matters as
the Administrative Agent may reasonably request
and (z) amend or modify this Agreement, pursuant
to one or more amendments or modifications in form
and substance satisfactory to the Administrative
Agent, to the extent necessary or desirable, in
the reasonable judgment of the Administrative
Agent, to take into account the Security Documents
and such security interests, pledges, assignments
and mortgages and such other matters related
thereto as the Administrative Agent may reasonably
request, such amendments and modifications to
include, without limitation, one or more
representations and warranties, covenants, events
of default and indemnities relating to the subject
matter addressed in clauses (x) through (z) above,
or the Security Documents, opinions or other
writings referred to therein. In order for OSG to
satisfy its obligations under this Section
8.1(A)(xix) and without limiting the provisions
set forth above, the assets constituting
Collateral hereunder, the determination of the
fair market value thereof and the form and
substance of the Security Documents, the opinions
referred to in clause (y) above and the amendments
and modifications referred to in clause (z) above
must each be satisfactory in form and substance to
the Administrative Agent and OSG must have
received a certificate signed by the
Administrative Agent stating that OSG has complied
with its obligations under this Section
8.1(A)(xix).
(b) At all times after the 90th day
(or the next succeeding Banking Day) referred to
in subsection (a) above the fair market value
(determined as provided in subsection (a)) of the
Collateral securing Advances hereunder shall be at
least equal to 130% of the aggregate principal
amount of all Advances outstanding hereunder from
time to time.
(c) None of the Majority Banks nor
the Agents shall incur any liability to any Person
(including, without limitation, any other Bank) as
a result of any determination (or any failure to
make any determination) pursuant to clauses
(i) and (ii) of subsection (a). Each of the
Borrowers hereby indemnifies, and each of the
Banks hereby indemnifies ratably in accordance
with its Commitment (to the extent that the
Borrowers do not so indemnify), each Majority Bank
and Agent against any cost, expense (including
reasonable counsel fees and disbursements), claim,
demand, action, loss or liability (except such as
result from its gross negligence or willful
misconduct) that it may suffer or incur in
connection with any action taken or omitted to be
taken pursuant to this Section 8.1(A)(xix).
(xx) Ownership of OSG Bulk and OSG
International. OSG shall cause OSG Bulk and OSG
International to be direct or indirect wholly-
owned Subsidiaries of OSG (excluding only
directors' qualifying shares).
B. The Borrowers will not, without the prior written
consent of the Majority Banks (or the Administrative Agent acting
with the consent of the Majority Banks):
(i) Limitation on Liens. And will not
permit any Subsidiary to, create, assume, incur
or in any manner become liable in respect of any
Secured Debt unless immediately after giving
effect thereto and to the application of the
proceeds thereof, the ratio of Unencumbered Assets
to Unsecured Debt shall not be less than 1.50 to
1;
(ii) Limitations on Funded Debt. And
will not permit any Recourse Subsidiary to,
create, assume or incur or in any manner be or
become liable in respect of any Funded Debt,
except:
(a) Funded Debt of OSG and its Recourse
Subsidiaries outstanding as of March 31, 1997
as the same is set forth on Schedule 3
attached hereto;
(b) Funded Debt of OSG and its Recourse
Subsidiaries; provided, however, that at the
time of issuance thereof and immediately
after giving effect thereto the Borrowers
shall be in compliance with Section
8.1(A)(xviii) above;
(c) renewals, extensions or refundings
of Funded Debt referred to in
Section 8.1(B)(ii)(a) or incurred pursuant to
the provisions of Section 8.1(B)(ii)(b),
without increase in the ranking or priority
thereof or principal amount thereof,
provided, that in the case of any refunding
of any such Funded Debt, the newly issued
Funded Debt shall have a weighted average
life to maturity at least equal to the
remaining weighted average life to maturity
of the Funded Debt being refunded; and
(d) Funded Debt under the Facility.
(iii) Conduct of Business. And will
not permit any Recourse Subsidiary to, acquire any
Operating Assets or make any Investment in
Operating Assets unless, after giving effect to
such acquisition or Investment at least 70% (based
on the most recent consolidated balance sheet of
OSG and its Recourse Subsidiaries required to be
provided pursuant to Section 8.1(A)(iv)) of the
Operating Assets of OSG and its Recourse
Subsidiaries are (on a consolidated basis) in
Shipping and Related Businesses; provided,
however, that the foregoing shall not limit or
restrict the acquisition of assets to be used in
the Shipping and Related Businesses of OSG and its
Recourse Subsidiaries or of any equity interest in
any Person engaged primarily in Shipping and
Related Businesses.
(iv) Limitation on Sale and Leasebacks.
And will not permit any Subsidiary to, enter into
any Sale and Leaseback Transaction unless either:
(a) after giving effect to such Sale
and Leaseback Transaction, the ratio of
Unencumbered Assets to Unsecured Debt shall be not
less than 1.50 to 1; or
(b) the proceeds of the sale of the
assets to be leased are at least equal to their
fair market value and such proceeds are applied
(or committed to be applied within 24 months of
receipt thereof pursuant to a binding written
contract) to (i) the purchase, acquisition or
construction of assets to be used in the business
of OSG and its Subsidiaries or (ii) retire Funded
Debt, provided that the percentage of proceeds, if
any, applied to pay Subordinated Funded Debt shall
not exceed the percentage which Subordinated
Funded Debt represents of Consolidated Funded
Debt. Pending the actual application of such
proceeds for the purposes described in clauses (i)
or (ii) above, such proceeds shall be held by OSG
or the relevant Subsidiary in Permitted
Investments.
(v) Mergers, Consolidations and Sales
of Assets.
(a) (i) Consolidate with or be a party
to a merger with any other corporation or
(ii) sell, lease (other than chartering in the
ordinary course of business - which shall not
include bareboat chartering for periods in excess
of ten (10) years) or otherwise dispose of all or
substantially all of the assets of OSG and its
Subsidiaries, taken as a whole; provided, however,
that OSG or any Subsidiary may consolidate or
merge with any other Person if (A) at the time of
such transaction and after giving effect thereto,
no Default or Event of Default shall have occurred
and be continuing, and (B) the surviving entity in
such consolidation or merger shall have assumed
all liabilities and obligations of the parties
thereto.
(b) In addition to the restrictions
contained in Section 8.1(B)(v)(a), OSG will not,
and will not permit any Recourse Subsidiary to,
sell, lease or otherwise dispose of (other than in
the ordinary course of business) any substantial
part (as defined in Section 8.1(B)(v)(c) below) of
the assets of OSG and its Subsidiaries, taken as a
whole (including the creation of Minority
Interests), provided that any Subsidiary may sell,
lease or otherwise dispose of all or substantially
all of its assets to OSG or a wholly-owned
Subsidiary. For the purposes of any determination
under this Section 8.1(B)(v)(b), a sale or other
disposition of assets of OSG and its Recourse
Subsidiaries shall include, but not be limited to,
the creation of any Minority Interests and any
other sale, transfer or other disposition of the
capital stock or assets of any Subsidiary (other
than to OSG or a wholly-owned Subsidiary)
including any merger, consolidation or sale of all
or substantially all of the assets of any
Subsidiary if the surviving or continuing or
acquiring corporation is not a Subsidiary.
(c) As used in this Section 8.1(B)(v),
a sale, lease or other disposition of assets shall
be deemed to be a "substantial part" of the assets
of OSG and its Recourse Subsidiaries, taken as a
whole, if the book value of such assets, when
added to the book value of all other assets sold,
leased or otherwise disposed of by OSG and its
Subsidiaries (other than in the ordinary course of
business) during the 12-month period ending with
the date of such sale, lease or other disposition,
exceeds 15% of Consolidated Net Tangible Assets,
determined as of the end of the immediately
preceding fiscal quarter. For the purposes of any
determination of "substantial part" under this
Section 8.1(B)(v), a Qualified Joint Venture
Transaction shall not be deemed a sale, lease or
other disposition of assets by OSG and its
Subsidiaries. A "Qualified Joint Venture
Transaction" shall mean a contribution of property
by OSG or a Subsidiary to a joint venture which,
in the good faith judgment of the Board of
Directors of OSG, is substantially equivalent in
value to the property contributed by the other co-
venturers in a joint venture whereunder (i) there
are one or more co-venturers other than OSG or a
Subsidiary and (ii) OSG or a Subsidiary maintains
at least a 50% equity interest and exercises (and
is entitled to exercise) at least equivalent
control of the management and administration of
such joint venture as the co-venturers exercise
(and are entitled to exercise). Notwithstanding
anything herein to the contrary, the parties agree
that the sale of shares of Celebrity Cruise Lines
Inc. to Royal Caribbean International shall not
constitute a sale, lease or other disposition of
assets to be used in determining if OSG and its
Recourse Subsidiaries have sold or disposed of a
substantial part of the assets of OSG and its
Recourse Subsidiaries.
For the purpose of making any
determination of "substantial part," sales, leases
and other dispositions of assets of OSG and its
Subsidiaries shall not be included if the net
proceeds are within 24 months after such sale
either (1) to be used to purchase or construct
other assets that are used in the business of OSG
and its Subsidiaries, (2) committed to be used
pursuant to a binding written contract to purchase
or construct other assets that are used in the
business of OSG and its Subsidiaries or (3) used
to pay or prepay Funded Debt, provided that the
percentage of proceeds, if any, applied to pay
Subordinated Funded Debt shall not exceed the
percentage which Subordinated Funded Debt
represents of Consolidated Funded Debt; provided
further that pending the actual application of
such proceeds for the purposes described in
clause(1) or (3) above, such net proceeds shall be
invested only in Permitted Investments.
(vi) Transactions with Affiliates. And
will not permit any Recourse Subsidiary to, enter
into or become a party to any material transaction
or arrangement with any Affiliate (including,
without limitation, the purchase from, sale to, or
exchange of property with, or the rendering of any
service by or for, any Affiliate), except pursuant
to the reasonable requirements of OSG's or such
Subsidiary's business and upon terms which are
fair and reasonable and in the best interests of
OSG or such Subsidiary.
(vii) Use of Proceeds. Use the
proceeds of the Advances in violation of
Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System, as in effect from
time to time.
(viii) Maximum Investments in Joint
Ventures. And will not permit any of its Recourse
Subsidiaries to, make any Investment in any Joint
Venture on any date if, immediately after giving
effect to such Investment, the aggregate amount of
all such Investments made by OSG and its Recourse
Subsidiaries after June 30, 1994 would exceed
22.5% of Consolidated Net Tangible Assets as of
the date of determination. Notwithstanding
anything herein to the contrary, the parties agree
that the July 30, 1997 acquisition of stock in
Royal Caribbean International shall not constitute
an Investment by OSG and its Recourse Subsidiaries
in any Joint Venture.
9 EVENTS OF DEFAULT
-----------------
9.1 In the event that any of the following events shall
occur and be continuing:
(a) Principal Payments. Any principal of the Advances
is not paid on the due date therefor; or
(b) Interest and other Payments. Any interest on the
Advances or any other amount becoming payable under this
Agreement and under the Notes or under any of them, is not paid
within three (3) Banking Days from the date when due; or
(c) Representations, etc. Any representation,
warranty or other statement made by the Borrowers in this
Agreement or in any other instrument, document or other agreement
delivered in connection herewith proves to have been untrue or
misleading in any material respect as at the date as of which it
was made; or
(d) Impossibility, Illegality. It becomes impossible
or unlawful for the Borrowers to fulfill any of the covenants and
obligations contained herein or in the Notes, or (in the event of
any illegality which arises solely as a result of the domicile of
any Bank and the Borrower fails to obtain a Replacement Bank in
accordance with Section 11.8 within thirty (30) days thereof) for
any of the Banks to exercise any of the rights vested in any of
them hereunder or under the Notes and such impossibility or
illegality, in the reasonable opinion of such Bank, will have a
material adverse effect on any of its rights hereunder or under
the Notes or on any of its rights to enforce any thereof; or
(e) Certain Covenants. One or more of the Borrowers
default in the performance or observance of any covenant
contained in Section 8.1(A)(ii), 8.1(A)(iv)(e), 8.1(A)(xi),
8.1(A)(xii), 8.1(A)(xv), 8.1(A)(xvi), 8.1(A)(xvii),
8.1(A)(xviii), 8.1(A)(xix), 8.1(B)(i), 8.1(B)(ii), 8.1(B)(iii),
8.1(B)(iv), 8.1(B)(v) or 8.1(B)(viii); or
(f) Covenants. One or more of the Borrowers default
in the performance of any term, covenant or agreement contained
in this Agreement or in the Notes, or in any other instrument,
document or other agreement delivered in connection herewith or
therewith, in each case other than an Event of Default referred
to elsewhere in this Section 9.1, and such default continues
unremedied for a period of fifteen (15) days after written notice
thereof has been given to the Borrowers by the Administrative
Agent at the request of any Bank; or
(g) Indebtedness and other Obligations. OSG or any of
the Subsidiaries shall default in the payment when due (subject
to any applicable grace period), whether by acceleration or
otherwise, of any Material Financial Obligation or any event or
condition shall occur which results in the acceleration of the
maturity of any Material Debt or, with the giving of notice or
lapse of time or both, would enable the holder of such Debt or
any Person acting on such holder's behalf to accelerate the
maturity thereof; or
(h) Note Agreements. There occurs any Event of
Default (as such term is defined in the Note Agreements) under
either of the Note Agreements which is continuing; or
(i) Bankruptcy. The Borrowers or any of the Material
Subsidiaries commences any proceedings relating to any
substantial portion of its property under any reorganization,
arrangement or readjustment of debt, dissolution, winding up,
adjustment, composition, bankruptcy or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect
("Proceeding"), or there is commenced against any thereof any
Proceeding and such Proceeding remains undismissed or unstayed
for a period of sixty (60) days; or any receiver, trustee,
liquidator or sequestrator of, or for, any thereof or any
substantial portion of the property of any thereof is appointed
and is not discharged within a period of sixty (60) days; or any
thereof by any act indicates consent to or approval of or
acquiescence in any Proceeding or to the appointment of any
receiver, trustee, liquidator or sequestrator of, or for, itself
or any substantial portion of its property; or
(j) Judgments. Any judgment or order is made the
effect whereof would be to render invalid this Agreement or the
Notes; or judgments or orders for the payment of money in excess
of $10,000,000 (or its equivalent in any other currency) shall be
rendered against OSG or any Subsidiary and such judgments or
orders shall continue unsatisfied and unstayed for a period of 30
days; or
(k) Inability to Pay Debts. Any of the Borrowers or
any of the Material Subsidiaries is unable to pay or admits its
inability to pay its debts as they fall due or if a moratorium
shall be declared in respect of any Indebtedness of any thereof;
or
(l) ERISA Debt. (i) any member of the ERISA Group or
any ERISA Affiliate shall fail to pay when due an amount or
amounts aggregating in excess of $5,000,000 which it or they
shall have become liable to pay under Title IV of ERISA or
(ii) any member of the ERISA Group or any ERISA Affiliate,
individually or collectively, shall incur, or shall reasonably
expect to incur, any Withdrawal Liability or liability upon the
happening of a Termination Event and the aggregate of all such
Withdrawal Liabilities and such other liabilities shall be in
excess of $30,000,000; or
(m) Invalidity or Revocation of Guarantee. The
obligation of OSG under Section 16 shall at any time and for any
reason cease to be valid and binding or OSG shall purport to
renounce its guarantee of the obligations of OSG Bulk or OSG
International hereunder;
then, the Banks' obligation to make the Facility available shall
cease and the Administrative Agent on behalf of the Banks may,
with the Majority Banks' consent and shall, upon the Majority
Banks' instruction, by notice to the Borrowers, declare the
entire Facility Balance, accrued interest and any other sums
payable by the Borrowers hereunder and under the Notes due and
payable whereupon the same shall forthwith be due and payable
without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived; provided that upon the
happening of an event specified in subclauses (i) or (k) of this
Section 9.1, the Facility Balance, accrued interest and any other
sums payable by the Borrowers hereunder and under the Notes shall
be immediately due and payable without declaration or other
notice to the Borrowers. In such event, the Creditors may
proceed to protect and enforce their rights by action at law,
suit in equity or in admiralty or other appropriate proceeding,
whether for specific performance of any covenant contained in
this Agreement or in the Notes or in aid of the exercise of any
power granted herein or therein, or the Banks or the
Administrative Agent may proceed to enforce the payment of the
Notes when due or to enforce any other legal or equitable right
of the Banks, or proceed to take any action authorized or
permitted by applicable laws for the collection of all sums due,
or so declared due, including, without limitation, the right to
appropriate and hold or apply (directly, by way of set-off or
otherwise) to the payment of the obligations of the Borrowers to
any of the Creditors hereunder and/or under the Notes (whether or
not then due) all moneys and other amounts of the Borrowers then
or thereafter in possession of the Banks, the balance of any
deposit account (demand or time, matured or unmatured) of the
Borrowers then or thereafter with the Banks and every other claim
of the Borrowers then or thereafter against the Banks.
9.2 Indemnification. The Borrowers severally, and not
jointly, agree to, and shall, indemnify and hold each of the
Creditors harmless against any loss or reasonable costs or
expenses (including legal fees and expenses) which any of the
Creditors sustains or incurs as a consequence of any default in
payment of the principal amount of the Advances or interest
accrued thereon or any other amount payable hereunder or under
the Note to which it is a party, including, but not limited to,
all actual losses incurred in liquidating or re-employing fixed
deposits made by third parties or funds acquired to effect or
maintain the Advances or any part thereof. A Creditor's
certification of such costs and expenses shall, absent any
manifest error, be conclusive and binding on the Borrowers.
9.3 Application of Moneys. All moneys received by any of
the Creditors under or pursuant to this Agreement or the Notes
after the happening of any Event of Default shall be applied by
the Administrative Agent in the following manner:
(i) first, in or towards the payment or
reimbursement of any expenses or liabilities
incurred by any of the Agents in connection with
the ascertainment, protection or enforcement of
its rights and remedies hereunder and under the
Notes,
(ii) secondly, in or towards payment of
any interest owing in respect of the Advances,
(iii) thirdly, in or towards
repayment of the Advances,
(iv) fourthly, in or towards payment of
all other sums which may be owing to any of the
Creditors under this Agreement or under the Notes,
and
(v) fifthly, the surplus (if any) shall
be paid to the Borrowers or to whomsoever else may
be entitled thereto.
10 ASSIGNMENTS; PARTICIPATIONS
---------------------------
10.1 Assignments. (a) This Agreement shall be binding
upon, and inure to the benefit of, the Borrowers and each of the
Creditors and their respective successors and assigns, except
that the Borrowers may not assign any of their rights or
obligations hereunder. Any Bank may assign all, or a
proportionate part in an amount equal to $10,000,000 or any
multiple thereof of its rights and obligations under this
Agreement to any one or more financial institutions approved by
the Administrative Agent and the Borrowers, which approval shall
not be unreasonably withheld; provided, however, that no such
consent shall be required if the assignee is immediately prior to
such assignment another Bank or an affiliate of the assigning
Bank and (the expenses of any Bank in connection with any such
assignment shall be for its own account), provided, further, in
the event of any assignment, such assignment is to be made
pursuant to an Assignment and Assumption Agreement substantially
in the form of Exhibit 2 hereto, and provided, further, that, in
the case of a partial assignment by any Bank of its rights and
obligations hereunder, each such assigning Bank's pro rata
portion of the Commitments and Advances shall aggregate not less
than $10,000,000. The Borrowers will take all reasonable actions
requested by the Banks to effect such assignment, including,
without limitation, the execution of a written consent to such
Assignment and Assumption Agreement.
(b) Notwithstanding the foregoing, any Bank may at any
time assign all or any portion of its rights under this Agreement
and the Notes to a Federal Reserve Bank to secure extensions of
credit by such Federal Reserve Bank to such Bank; provided that
no such assignment shall release a Bank from any of its
obligations hereunder or substitute any such Federal Reserve Bank
for such Bank as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, the Borrowers shall, at the
request of the assigning Bank, duly execute and deliver to the
assigning Bank a promissory note or notes evidencing the portion
of the Facility Balance owing by the Borrowers to the assigning
Bank hereunder.
10.2 Participations. Any Bank may at any time sell to one
or more commercial banks or other financial institutions (each of
such commercial banks and other financial institutions being
herein called a "Participant") participating interests in any of
the Advances, its Commitment or other interests of such Bank
hereunder; provided, however, that
(a) no participation contemplated in this Section 10.2
shall relieve such Bank from its Commitment or its other
obligations hereunder,
(b) such Bank shall remain solely responsible for the
performance of its Commitment and such other obligations,
(c) no Participant, unless such Participant is an
Affiliate of such Bank, shall be entitled to require such
Bank to take or refrain from taking any action hereunder,
except that such Bank may agree with any Participant that
such Bank will not, without such Participant's consent, take
any of the following actions: (i) increase the Commitment
of such Bank, reduce any fees described in Section 12, or
extend the Final Payment Date, (ii) extend the due date for,
or reduce the amount of, any scheduled repayment or
prepayment of fees, principal of or interest on any Advance
(or reduce the principal amount of or rate of interest on
any Advance), or (iii) release any guarantor from its
obligations under any guarantee, and
(d) the Borrowers shall not be required to pay any
amount under Sections 6.1 or 11 that is greater than the
amount which it would have been required to pay had no
participating interest been sold.
11 ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
--------------------------------------------------
11.1. Illegality. In the event that by reason of any
change in any applicable law, regulation or regulatory
requirement or in the interpretation thereof a Bank has a
reasonable basis to conclude that it has become unlawful for such
Bank to maintain or give effect to its obligations as
contemplated by this Agreement, such Bank shall inform the
Borrowers and the Administrative Agent to that effect, whereafter
the liability of such Bank to make its Commitment available shall
forthwith cease and the Borrowers shall be required to repay to
such Bank that portion of the Facility Balance advanced by such
Bank immediately. In any such event, but without prejudice to
the aforesaid obligations of the Borrowers to prepay the relevant
portion of the Facility Balance, the Borrowers and such Bank
shall negotiate in good faith with a view to agreeing on terms
for making the Commitment available from another jurisdiction or
otherwise restructuring the Commitment on a basis which is not
unlawful.
11.2 Increased Cost. If any change in applicable law,
regulation or regulatory requirement or in the interpretation or
application thereof by any governmental or other authority shall:
(i) subject any Bank to any Taxes, or
(ii) change the basis of taxation to any
Bank of payments of principal or interest or any
other payment due or to become due pursuant to
this Agreement (other than a change in the basis
effected by the United States of America, the
State or The City of New York or any governmental
subdivision or other taxing authority having
jurisdiction over the Bank (unless such
jurisdiction is asserted solely by reason of the
activities of any of the Borrowers and the
Subsidiaries) or such other jurisdiction where the
Advances may be payable), or
(iii) impose, modify or deem
applicable any reserve requirements or require the
making of any special deposits against or in
respect of any assets or liabilities of, deposits
with or for the account of, or loans by, any Bank,
or
(iv) impose on any Bank any other
condition affecting the Facility or any part
thereof,
and the result of the foregoing is either to increase the cost to
such Bank of making available or maintaining the Facility or any
part thereof or to reduce the amount of any payment received by
such Bank, then and in any such case if such increase or
reduction in the opinion of such Bank materially affects the
interests of such Bank under or in connection with this
Agreement:
(a) such Bank shall notify the
Borrowers and the Administrative Agent in writing
of the happening of such event (which notice shall
include an explanation for and calculations of
such increased cost in reasonable detail),
(b) the Borrowers agree forthwith
upon receipt of notice from such Bank as aforesaid
to pay to such Bank such amount as such Bank
certifies to be necessary to compensate such Bank
for such additional cost or such reduction, and
(c) any such notice as is referred
to in sub-section (b) of this Section 11.2 may be
made by a Bank at any time before or within one
(1) year after any repayment of the Facility
Balance;
provided, however, that before making any such demand, such Bank
agrees to use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to designate a
different lending office if the making of such designation would
avoid the need for, or reduce the amount of, such increased cost
or such reduction and would not, in the reasonable judgment of
such Bank, be otherwise disadvantageous to such Bank.
11.3 Nonavailability of Funds. If the Administrative Agent
shall determine that, by reason of circumstances affecting the
London Interbank Market generally, adequate and reasonable means
do not or will not exist for ascertaining the LIBOR Rate for any
LIBOR Rate Advance, the Administrative Agent shall give notice of
such determination to the Borrowers. The Borrowers and the
Administrative Agent shall then negotiate in good faith in order
to agree upon a mutually satisfactory interest rate and/or
interest period to be substituted for those which would otherwise
have applied under this Agreement. If the Borrowers and the
Administrative Agent are unable to agree upon such a substituted
interest rate and/or interest period within thirty (30) days of
the giving of such determination notice, the Administrative Agent
shall set an interest rate and interest period to take effect
from the expiration of the interest period in effect at the date
of determination, which rate shall be equal to the Applicable
Margin plus the cost to each Bank of funding such Advance. In
the event the state of affairs referred to in this Section 11.3
shall extend beyond the end of any interest period, the foregoing
procedure shall continue to apply until circumstances are such
that the LIBOR Rate may be determined pursuant to Section 5.
11.4 Determination of Losses. A certificate or
determination notice of such affected Bank(s) or the
Administrative Agent, as the case may be, as to any of the
matters referred to in this Section 11 shall, absent manifest
error, be conclusive and binding on the Borrowers.
11.5 Compensation for Losses. Where any portion of the
Facility Balance is to be prepaid by the Borrowers pursuant to
Section 11.1 the Borrowers agree simultaneously with such
prepayment to pay to the affected Bank all accrued interest to
the date of actual payment and all other sums payable by the
Borrowers to such Bank pursuant to this Agreement together with
such amounts as may be certified by such Bank to be necessary to
compensate such Bank for any actual loss, premium or penalties
incurred or to be incurred by it on account of funds borrowed to
make, fund or maintain its portion of the Facility Balance for
the remainder (if any) of the then current interest periods, but
otherwise without penalty or premium.
11.6 Compensation for Breakage Costs. The Borrowers shall
pay to the Banks, upon the request of the Banks such amount or
amounts as shall be sufficient (in the reasonable opinion of the
Banks) to compensate them for any loss, cost or expense incurred
by it as a result of:
(a) any payment, prepayment or conversion
(including any such prepayment or conversion made
pursuant to Sections 4.2 and 9.1) of a LIBOR Rate
Advance on a date other than the last day of an
Interest Period for such LIBOR Rate Advance; or
(b) any failure by the Borrowers to borrow
(including without limitation any such failure
resulting from a condition precedent set forth in
Section 3), convert or prepay a LIBOR Rate Advance held
by the Banks on the date for such borrowing, conversion
or prepayment specified in the relevant request for
such LIBOR Rate Advance, notice of prepayment or Notice
of Conversion or Continuation delivered under Sections
2.2, 4.2 or 4.3 hereof, respectively;
such compensation to include, without limitation, an amount equal
to the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount so paid, prepaid or
converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to the
last day of the then current Interest Period for such LIBOR Rate
Advance or, in the case of a failure to borrow, the Interest
Period for such LIBOR Rate Advance which would have commenced on
the date of such failure to borrow) at the applicable rate of
interest for such LIBOR Rate Advance provided for herein over
(ii) the amount of interest which otherwise would have accrued
on such principal amount at a rate per annum equal to the
interest component (as reasonably determined by the Banks) of the
amount (as reasonably determined by the Banks) the Banks would
have bid in the Eurocurrency market for Dollar deposits of
amounts comparable to such principal amount and maturities
comparable to such Interest Period.
11.7 Currency Indemnity. (a) If for the purpose of
obtaining or enforcing a judgment in any court in any country it
becomes necessary to convert into any other currency (the
"judgment currency") an amount due in Dollars under this
Agreement or the Notes, then the conversion shall be made, in the
discretion of the Administrative Agent, at the rate of exchange
prevailing either on the date of default or on the day before the
day on which the judgment is given or the order for enforcement
is made, as the case may be (the "conversion date"), provided
that the Administrative Agent shall not be entitled to recover
under this clause any amount in the judgment currency which
exceeds at the conversion date the amount in Dollars due under
this Agreement and/or the Notes.
(b) If there is a change in the rate of exchange
prevailing between the conversion date and the date of actual
payment of the amount due, the Borrowers shall pay such
additional amounts (if any, but in any event not a lesser amount)
as may be necessary to ensure that the amount paid in the
judgment currency when converted at the rate of exchange
prevailing on the date of payment will produce the amount then
due under this Agreement and/or the Notes, in Dollars; any excess
over the amount due received or collected by the Banks shall be
remitted to the Borrowers.
(c) Any amount due from the Borrowers under
Section 11.7(b) shall be due as a separate debt and shall not be
affected by judgment being obtained for any other sums due under
or in respect of this Agreement and/or the Notes.
(d) The term "rate of exchange" in this Section 11.7
means the rate at which the Administrative Agent in accordance
with its normal practices is able on the relevant date to
purchase Dollars with the judgment currency and includes any
premium and costs of exchange payable in connection with such
purchase.
11.8 Replacement of Bank. If the obligation of any Bank to
make its pro rata share of any Advance has been suspended or
terminated pursuant to Section 11.1, the Borrowers shall have the
right, upon twenty (20) Banking Days' prior notice to such Bank,
to cause one or more banks (a "Replacement Bank(s)") (which may
be one or more of the Banks), each such Replacement Bank to be
reasonably satisfactory to the Majority Banks (determined for
this purpose as if such transferor Bank had no Commitment and
held no interest in the Notes issued hereunder) and, in each
case, with the written acknowledgment of the Administrative
Agent, to purchase such Bank's pro rata share of the Advances and
assume the Commitment of such Bank pursuant to an Assignment and
Assumption Agreement. If one or more such banks are identified
by the Borrowers and, if required pursuant to this Section,
approved as being reasonably satisfactory to the Majority Banks
(determined as provided above), the transferor Bank shall consent
to such sale and assumption by executing and delivering an
Assignment and Assumption Agreement. Upon execution and delivery
of an Assignment and Assumption Agreement by the Borrowers, the
transferor Bank, the Replacement Bank and the Administrative
Agent, and payment by the Replacement Bank to the transferor Bank
of an amount equal to the purchase price agreed between such
transferor Bank and such Replacement Bank, such Replacement Bank
shall become a Bank party to this Agreement (if it is not already
a party hereto) and shall have all the rights and obligations of
a Bank with a Commitment (which, if such Replacement Bank is
already a party hereto, shall take into account such Replacement
Bank's then existing Commitment hereunder) as set forth in such
Assignment and Assumption Agreement and the transferor Bank shall
be released from its obligations hereunder and no further consent
or action by any other Person shall be required. In the event
that the Administrative Agent, in its capacity as a Bank, is
required to sell its pro rata share of the Advances and its
Commitment hereunder pursuant to this Section 11.8, the
Administrative Agent shall, promptly upon the consummation of any
assignment pursuant to this Section 11.8, resign as
Administrative Agent hereunder and the Borrowers shall (subject
to the consent of the Majority Banks) have the right to appoint
another Agent as successor Administrative Agent, all in
accordance with Section 14.8.
12 FEES, EXPENSES AND INDEMNIFICATION
----------------------------------
12.1 Commitment Fee. OSG shall pay the Administrative Agent
(for the account of the Banks) a commitment fee, which fee shall
be a per annum percentage which will vary based on the rating
level assigned to OSG's senior unsecured debt without third-party
credit enhancement by S&P and Moody's, as per the grid set forth
in Schedule 2, on the undrawn portion of the Facility, accruing
from the date of execution of this Agreement, which shall be
payable during the Facility Period quarterly in arrears beginning
September 30, 1997 and on the day on which the Commitments
terminate. Such commitment fee shall accrue from day to day and
be calculated on the basis of actual days elapsed over a 365/366
day year.
12.2 Utilization Fee. OSG shall pay the Administrative
Agent (for the account of the Banks) a utilization fee, which fee
shall be equal to 0.05% of the aggregate amount of the Advances
under the Facility which is in excess of the Excess Utilization
Amount, which shall be payable during the period in which the
aggregate amount of the Advances under the Facility exceed the
Excess Utilization Amount quarterly in arrears beginning
September 30, 1997 and on the day on which the Commitments
terminate. Such utilization fee shall accrue from day to day and
be calculated on the basis of actual days elapsed over a 360 day
year for such portion of the Excess Utilization Amount comprised
of LIBOR Rate Advances and a 365/366 day year for such portion of
the Excess Utilization Amount comprised of Base Rate Advances.
12.3 Costs, Charges and Expenses. OSG agrees to pay (i) the
Administrative Agent upon demand (whether or not the Facility or
any part thereof is made available hereunder) all reasonable
costs, charges and expenses (including legal fees and expenses)
incurred by the Administrative Agent in connection with the
negotiation, preparation, and execution of this Agreement and the
Notes or otherwise in connection with the Facility, as well as in
connection with any supplements, amendments, waivers or consents
relating thereto, (ii) if an Event of Default occurs, the
Administrative Agent and any Bank, all out-of-pocket expenses of
each such party, including reasonable fees and disbursements of
its counsel, in connection with such Event of Default and
collection or other proceedings resulting therefrom, and (iii)
the Syndication Agent upon demand (whether or not the Facility or
any part thereof is made available hereunder) all reasonable
costs, charges and out-of-pocket expenses incurred by the
Syndication Agent in connection with the syndication of the
Facility.
12.4 Indemnification. Neither any Creditor nor any of its
directors, officers, agents or employees shall be liable to the
Borrowers for any action taken or not taken by it in connection
herewith in the absence of its own gross negligence or willful
misconduct. The Borrowers hereby severally, and not jointly,
agree to indemnify the Creditors, their respective affiliates and
the respective directors, officers, agents and employees of the
foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel,
which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or
not such Indemnitee shall be designated a party thereto) brought
or threatened relating to or arising out of this Agreement, any
actual or proposed use of proceeds of Advances hereunder, or any
related transaction or claim; provided that (i) no Indemnitee
shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as
determined by a court of competent jurisdiction and (ii) to the
extent permitted by law, the Indemnitee shall provide the
Borrowers with prompt notice of any such investigative,
administrative or judicial proceeding after Indemnitee becomes
aware of such proceeding (provided, however, that the
Indemnitee's failure to provide such notice in a timely manner
shall not relieve the Borrowers of their obligations hereunder).
13 APPLICABLE LAW, JURISDICTION AND WAIVER
---------------------------------------
13.1 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
13.2 Jurisdiction. The Borrowers hereby irrevocably submits
to the jurisdiction of the courts of the State of New York and of
the United States District Court for the Southern District of New
York in any action or proceeding brought against it by any
Creditor under this Agreement or any instrument delivered
hereunder and hereby agrees that service of summons or other
legal process thereon may be made by serving a copy of the
summons or other legal process in any such action on the
Borrowers by mailing or delivering the same by hand to the
Borrowers at the address indicated for notices in Section 15.
The service, as herein provided, of such summons or other legal
process in any such action or proceeding shall be deemed personal
service and accepted by the Borrowers as such, and shall be legal
and binding upon the Borrowers for all the purposes of any such
action or proceeding. Final judgment (a certified or exemplified
copy of which shall be conclusive evidence of the fact and of the
amount of any indebtedness of the Borrowers to any of the
Creditors) against the Borrowers in any such legal action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment. In the event that any of
the Borrowers shall not be conveniently available for such
service, each Borrower hereby irrevocably appoints the Person who
then is the Secretary of State of the State of New York as its
attorney-in-fact and agent. Notwithstanding anything herein to
the contrary, a Creditor may bring any legal action or proceeding
in any other appropriate jurisdiction.
13.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND
BETWEEN THE BORROWERS AND EACH OF THE CREDITORS THAT EACH OF THEM
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY
HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT OR THE NOTE.
14 THE AGENTS
----------
14.1 Appointment and Authorization. Each Bank irrevocably
appoints and authorizes each Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement
and the Notes as are delegated to such Agent by the terms hereof
or thereof, together with all such powers as are reasonably
incidental thereto.
14.2 Agents and Affiliates. The Chase Manhattan Bank,
Morgan Guaranty Trust Company of New York and Citibank, N.A.,
shall have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same
as though it were not an Agent and each Agent and its Affiliates
may accept deposits from, lend money to, and generally engage in
any kind of business with, OSG or any Subsidiary of OSG or any
Affiliate thereof as if it were not an Agent hereunder.
14.3 Action by Agents. The obligations of each Agent
hereunder are only those expressly set forth herein. Without
limiting the generality of the foregoing, no Agent shall be
required to take any action with respect to any Event of Default,
except, in the case of the Administrative Agent, as expressly
provided in Section 9.
14.4 Consultation with Experts. Each Agent may consult with
legal counsel (who may be counsel for one or more of the
Borrowers), independent public accountants and other experts
selected by it and shall not be liable to any Bank for any action
taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
14.5 Liability of the Agents. No Agent nor any of their
respective directors, officers, agents or employees shall be
liable to any Bank for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the
Majority Banks or (ii) in the absence of its own gross negligence
or willful misconduct. No Agent nor any of their respective
directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with
this Agreement or any Advance hereunder; (ii) the performance or
observance of any of the covenants or agreements of any Borrower;
(iii) the satisfaction of any condition specified in Section 3,
except receipt of items required to be delivered to such Agent;
or (iv) the validity, effectiveness or genuineness of this
Agreement, the Notes or any other instrument or writing furnished
in connection herewith. No Agent shall incur any liability by
acting in reliance upon any notice, consent, certificate,
statement or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
14.6 Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify each Agent, its
affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the Borrowers) against
any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except
such as result from such indemnitee's gross negligence or willful
misconduct) that such indemnitees may suffer or incur in
connection with this Agreement or that such indemnitees may
suffer or incur in connection with any action taken or omitted by
such indemnitees hereunder. Without limiting the generality of
the foregoing, each Bank agrees to reimburse each Agent promptly
upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees and disbursements) incurred by
such Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities
under, this Agreement, to the extent that such Agent is not
reimbursed for such expenses by the Borrowers. Under no
circumstances shall any Agent be obligated to expend its own
funds for the protection of the interests of the Banks, but each
Agent shall be entitled to be indemnified to its satisfaction
hereunder by the Banks prior to taking any action or expending
any funds hereunder.
14.7 Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon any Agent or any other
Bank, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon any Agent or any
other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this
Agreement.
14.8 Successor Administrative Agent. The Administrative
Agent may resign at any time by giving written notice thereof to
the Banks and OSG. Upon any such resignation, OSG shall appoint
a successor Administrative Agent, subject to the consent of the
Majority Banks (determined for this purpose as if the Bank
resigning as Administrative Agent had no Commitment and held no
interest in the Notes hereunder). If no successor Administrative
Agent shall have been so appointed by OSG, and shall have
accepted such appointment, within 30 days after the retiring
Administrative Agent gives notice of resignation, then the
retiring Administrative Agent may, on behalf of the Banks,
appoint a successor Administrative Agent, which shall be a
commercial bank organized or licensed under the laws of the
United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000. Upon the
acceptance of its appointment as Administrative Agent hereunder
by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Administrative
Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was
Administrative Agent.
14.9 Agents' Fees. OSG shall pay to each Agent for its own
account fees in the amounts and at the times previously agreed
upon between OSG and such Agent. In connection with any
assignment pursuant to Section 10.1, the transferor Bank shall
pay to the Administrative Agent an administrative fee for
processing such assignment in the amount of $3,000.
14.10 Distribution of Payments. Whenever any payment is
received by the Administrative Agent from the Borrowers for the
account of the Banks, or any of them, whether of principal or
interest on the Notes, commitment fees under Section 12.1, or
otherwise, it will thereafter cause like funds relating to such
payment to be promptly distributed ratably to the Banks according
to their respective Commitments, in each case to be applied
according to the terms of this Agreement.
14.11 Holder of Interest in Notes. The Administrative Agent
may treat each Bank as the holder of all of the interest of such
Bank in the Notes unless and until the Administrative Agent has
received a copy of an Assignment and Assumption Agreement
evidencing the transfer of all or any part of such Bank's
interest in the Facility.
14.12 Assumption re Event of Default. Except as otherwise
provided in Section 14.13, the Administrative Agent shall be
entitled to assume that no Event of Default, or event which with
the giving of notice or lapse of time, or both, would constitute
an Event of Default, has occurred and is continuing, unless the
Administrative Agent has been notified by the Borrowers of such
fact or has been notified by a Bank that such Bank considers that
an Event of Default or such an event (specifying in detail the
nature thereof) has occurred and is continuing. In the event
that the Administrative Agent shall have been notified by any
party in the manner set forth in the preceding sentence of any
Event of Default or of an event which with the giving of notice
or lapse of time, or both, would constitute an Event of Default,
the Administrative Agent shall notify the Banks and shall take
action and assert such rights under this Agreement and under the
Notes as the Majority Banks shall request in writing.
14.13 Notification of Event of Default. The Administrative
Agent hereby undertakes promptly to notify the Banks, and each of
the Banks hereby undertakes promptly to notify the
Administrative Agent and the other Banks, of the existence of any
Event of Default which shall have occurred and be continuing of
which the Administrative Agent or such Bank has actual knowledge.
15 NOTICES AND DEMANDS
-------------------
All notices, requests, demands and other communications
to any party hereunder shall be in writing (including prepaid
overnight courier, facsimile transmission or similar writing) and
shall be given to the Borrowers and the Administrative Agent at
their respective addresses or telecopy numbers set forth below
and to any Bank at the address or telecopy number set forth in
its Administrative Questionnaire or at such other address or
telecopy number as such party may hereafter specify for the
purpose by notice to each other party hereto. Each such notice,
request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section and telephonic confirmation of
receipt thereof is obtained or (ii) if given by mail, prepaid
overnight courier or any other means, when received at the
address specified in this Section or when delivery at such
address is refused.
If to the Borrowers:
1114 Avenue of the Americas
New York, New York 10036
Attention: Robert N. Cowen
Senior Vice President and Secretary
Fax: (212) 578-1794
with a copy to:
Myles R. Itkin
Senior Vice President and Treasurer
Overseas Shipholding Group, Inc.
1114 Avenue of the Americas
New York, New York 10036
Fax: (212) 578-1670
If to the Administrative Agent:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attention: Mr. Paul Griffith
Fax: (212) 793-3588
16 GUARANTY
--------
16.1 Guaranty. OSG hereby unconditionally and irrevocably
guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and
interest on the Notes issued by OSG Bulk and OSG International
pursuant to this Agreement and the full and punctual payment of
all other amounts payable by OSG Bulk and OSG International under
this Agreement. Upon failure by OSG Bulk or OSG International to
pay punctually any such amount, OSG shall forthwith on demand by
the Administrative Agent pay the amount not so paid at the place
and in the manner specified in this Agreement.
16.2 Guaranty Unconditional. The obligations of OSG
hereunder shall be unconditional, irrevocable and absolute and,
without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of OSG Bulk
or OSG International under this Agreement or any Note, by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to
this Agreement or any Note;
(iii) any release, non-perfection or invalidity of any
direct or indirect security for any obligation of OSG Bulk
or OSG International under this Agreement or any Note;
(iv) any change in the corporate existence, structure
or ownership of OSG Bulk or OSG International, or any
insolvency, bankruptcy, reorganization or other similar
proceeding affecting OSG Bulk or OSG International or their
respective assets or any resulting release or discharge of
any obligation of OSG Bulk or OSG International contained in
this Agreement or any Note;
(v) the existence of any claim, set-off or other
rights which OSG may have at any time against OSG Bulk, OSG
International, any Agent, any Bank or any other Person,
whether in connection herewith or any unrelated transaction,
provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or
against OSG Bulk or OSG International for any reason of this
Agreement or any Note, or any provision of applicable law or
regulation purporting to prohibit the payment by OSG Bulk or
OSG International of the principal of or interest on any
Note or any other amount payable by OSG Bulk or OSG
International under this Agreement; or
(vii) any other act or omission to act or delay of any
kind by OSG Bulk or OSG International, any Agent, any Bank
or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of OSG's
obligations hereunder.
16.3 Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. OSG's obligations hereunder shall remain
in full force and effect until the principal of and interest on
the Notes and all other amounts payable by OSG Bulk and OSG
International under this Agreement shall have been paid in full.
If at any time any payment of the principal of or interest on any
Note or any other amount payable by OSG Bulk or OSG International
under this Agreement is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of
OSG Bulk or OSG International or otherwise, OSG's obligations
hereunder with respect to such payment shall be reinstated as
though such payment had been due but not made at such time.
16.4 Waiver by OSG. OSG irrevocably waives acceptance
hereof and presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time
any action be taken by any Person against OSG Bulk or OSG
International or any other Person.
16.5 Waiver of Subrogation. OSG irrevocably waives, but
only until the Commitments hereunder shall terminate and all
amounts payable hereunder by OSG to the Creditors (or any of
them) have been paid in full, any and all rights to which it may
be entitled, by operation of law or otherwise, upon making any
payment hereunder to be subrogated to the rights of the payee
against OSG Bulk or OSG International with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated
by OSG Bulk or OSG International in respect thereof.
16.6 Stay of Acceleration. If acceleration of the time for
payment of any amount payable by OSG Bulk or OSG International
under this Agreement or the Notes is stayed upon the insolvency,
bankruptcy or reorganization of OSG Bulk or OSG International, as
the case may be, all such amounts otherwise subject to
acceleration under the terms of this Agreement shall nonetheless
be payable by OSG hereunder forthwith on demand by the
Administrative Agent made at the request of the Majority Banks.
17 MISCELLANEOUS
-------------
17.1 Time of Essence. Time is of the essence of this
Agreement but no failure or delay on the part of any Creditor to
exercise any power or right under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise by any
Creditor of any power or right hereunder preclude any other or
further exercise thereof or the exercise of any other power or
right. The remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.
17.2 Unenforceable, etc., Provisions - Effect. In case any
one or more of the provisions contained in this Agreement or in
the Notes would, if given effect, be invalid, illegal or
unenforceable in any respect under any law applicable in any
relevant jurisdiction, said provision shall not be enforceable
against the Borrowers, but the validity, legality and
enforceability of the remaining provisions herein or therein
contained shall not in any way be affected or impaired thereby.
17.3 References. References herein to Sections, Schedules
and Exhibits are to be construed as references to sections of,
and schedules and exhibits to, this Agreement.
17.4 Further Assurances. The Borrowers agree that if this
Agreement or the Notes shall at any time be deemed by the Banks
for any reason insufficient in whole or in part to carry out the
true intent and spirit hereof or thereof, it will execute or
cause to be executed such other and further assurances and
documents as in the opinion of the Banks may be required in order
more effectively to accomplish the purposes of this Agreement
and/or the Notes.
17.5 Entire Agreement, Amendments. This Agreement and the
Notes constitute the entire agreement of the parties hereto,
including all parties added hereto pursuant to an Assignment and
Assumption Agreement. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original, but all such counterparts together shall constitute one
and the same instrument. Any provision of this Agreement or the
Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrowers and the
Majority Banks (and, if the rights or duties of the
Administrative Agent are affected thereby, by the Administrative
Agent); provided that no amendment or waiver shall, unless signed
by all the Banks, (i) increase or decrease the Commitment of any
Bank or subject any Bank to any additional obligation,
(ii) reduce the principal of or rate of interest on any Advance
or any fees hereunder, (iii) postpone the date fixed for any
payment of principal of or interest on any Advance or any fees
hereunder or for any termination of any Commitment, (iv) amend
Section 10, (v) waive any condition precedent to the making of an
Advance (other than the condition precedent set forth in Section
3.2(a), (vi) release any guarantor from any of its obligations
under any guaranty or amend or modify any such obligations under
any guaranty, (vii) if any Collateral shall have been granted
pursuant to Section 8.1(A)(xix), release any such Collateral or
(viii) amend or modify the definition of "Majority Banks" or this
Section 17.5 or otherwise change the percentage of the
Commitments or of the aggregate unpaid principal amount of the
Facility Balance, or the number or category of Banks, which shall
be required for the Banks or any of them to take any action under
this Section or any other provision of this Agreement.
17.6 Headings. In this Agreement, section headings are
inserted for convenience of reference only and shall not be taken
into account in the interpretation of this Agreement.
17.7 Survival. The obligations of the Borrowers under
Section 6, 9.2 and 11 shall survive the termination of this
Agreement and the payment in full of all obligations hereunder.
17.8 Consequences of Effectiveness. (a) On the Amendment
Effective Date, the Existing Agreement will be automatically
amended to read as this Agreement reads.
(b) On and after the Amendment Effective Date, the
rights and obligations of the parties hereto shall be governed by
the provisions of this Agreement, and the rights and obligations
of the parties under the Existing Agreement and the COFR Facility
with respect to the period prior to the Amendment Effective Date
shall continue to be governed by the provisions thereof as in
effect prior to the Amendment Effective Date except that (i) all
Advances outstanding under the Existing Agreement and the COFR
Facility shall be due and payable on the Amendment Effective
Date, (ii) all interest and commitment fees accrued to but not
including the Amendment Effective Date and all other amount's
owing by the Borrowers or any of them under the Existing
Agreement and the COFR Facility shall be due and payable on the
Amendment Effective Date and (iii) the commitment of each non-
continuing bank under the Existing Agreement and the COFR
Facility shall terminate on the Amendment Effective Date.
17.9 Confidentiality. The Agents and each Bank shall hold
all non-public information (either in the form of non-public
documentation relating to the Facility or which otherwise has
been identified as non-public information by the Borrowers)
obtained pursuant to the requirements of this Agreement in
accordance with its customary procedures for handling
confidential information of this nature and in accordance with
safe and sound banking practices and in any event shall have the
right to make disclosure to any of their respective examiners,
Affiliates, outside auditors, counsel and other professional
advisors in connection with this Agreement or as reasonably
required by any bona fide transferee or Participant, potential
bona fide transferee or Participant or as required or requested
by any governmental agency or representative thereof or pursuant
to legal process or as required by applicable law; provided,
however, that
(a) unless specifically prohibited by applicable law
or court order, such Agent or Bank shall notify the
Borrowers of any request by any governmental agency or
representative thereof (other than any such request in
connection with an examination of the financial condition of
such Agent or Bank by such governmental agency) for
disclosure of any such non-public information as soon as
possible after any such request;
(b) any such bona fide transferee or Participant by
their acceptance of such assignment or participation shall
be deemed to have agreed (i) to be bound by this Section
17.9 and (ii) to require any other Person to whom such
transferee or Participant discloses such non-public
information to be similarly bound by this Section 17.9;
(c) the Agents and each Bank shall require any
potential bona fide transferee or Participant to whom the
Agents or any Bank may disclose such non-public information
to be bound by a confidentiality agreement containing
provisions substantially identical to this Section 17.9
(except that subparagraph (d) shall not apply unless such
Person becomes a transferee or Participant) or incorporating
the same by reference; and
(d) except as may be required by an order of a court
of competent jurisdiction and to the extent set forth
therein (but in such case, the Agents and the Banks may
retain any materials furnished by the Borrowers in
accordance with their customary credit or document retention
policies), the Agents and the Banks shall not be obligated
or required to return any materials furnished by the
Borrowers.
IN WITNESS whereof the parties hereto have caused this
Agreement to be duly executed by their duly authorized
representative as of the day and year first above written.
OVERSEAS SHIPHOLDING GROUP, INC.
By S/ALAN CARUS
-------------------------------------
Name: ALAN CARUS
Title: CONTROLLER
OSG BULK SHIPS, INC.
By S/ROBERT E. JOHNSTON
--------------------------------------
Name: ROBERT E. JOHNSTON
Title: VICE PRESIDENT
OSG INTERNATIONAL, INC.
By S/MARK A. LOWE
--------------------------------------
Name: MARK A. LOWE
Title: VICE PRESIDENT
THE CHASE MANHATTAN BANK, as
Syndication Agent and Bank
By S/JAMES B. TREGER
--------------------------------------
Name: JAMES B. TREGER
Title: VICE PRESIDENT
CITIBANK, N.A., as Administrative Agent
and Bank
By S/ROBERT D. WETRUS
--------------------------------------
Name: ROBERT D. WETRUS
Title: ATTORNEY-IN-FACT
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Documentation Agent
and Bank
By S/JAMES E. CONDON
--------------------------------------
Name: JAMES E. CONDON
Title: VICE PRESIDENT
LANDESBANK SCHLESWIG-
HOLSTEIN GIROZENTRALE, Bank
By S/HARALD KUEUIK
--------------------------------------
Name: HARALD KUEUIK
Title: VICE PRESIDENT
By S/CHRISTIAN BOCK
--------------------------------------
Name: CHRISTIAN BOCK
Title: ASSISTANT VICE PRESIDENT
SKANDINAVISKA ENSKILDA BANKEN AB
(PUBL), Bank
By S/MICHAEL QUICK S/MARCUS SCARLETT
--------------------------------------
Name: MICHALE QUICK MARCUS SCARLETT
Title:HEAD OF CREDIT,LONDON
By
--------------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH, Bank
By S/PASCAL POUPELLE
--------------------------------------
Name: PASCAL POUPELLE
Title: EXECUTIVE VICE PRESIDENT
THE BANK OF NOVA SCOTIA, Bank
By S/J.R. TRIMBLE
--------------------------------------
Name: J.R. TRIMBLE
Title: SENIOR RELATIONSHIP MANAGER
ROYAL BANK OF CANADA, Bank
By S/CHRISTINA P. PAPPAS
--------------------------------------
Name: CHRISTINA P. PAPPAS
Title: ASSOCIATE
CHRISTIANIA BANK OG KREDITKASSE ASA,
NEW YORK BRANCH, Bank
By S/HANS CHR. KJELSRUD
--------------------------------------
Name: HANS CHR. KJELSRUD
Title: FIRST VICE PRESIDENT
By S/CARL-PETTER SVENDSEN
--------------------------------------
Name: CARL-PETTER SVENDSEN
Title: FIRST VICE PRESIDENT
CIBC, INC., Bank
By S/WILLIAM J. KOSLO, JR.
--------------------------------------
Name: WILLIAM J. KOSLO, JR
Title: DIRECTOR
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH, Bank
By S/MR. NOBORU KUBOTA
--------------------------------------
Name: MR. NOBORU KUBOTA
Title: DEPUTY GENERAL MANAGER
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
Bank
By S/PAULA MUELLER
--------------------------------------
Name: P. MUELLER
Title: VICE PRESIDENT
THE FUJI BANK, LIMITED,
NEW YORK BRANCH, Bank
By S/RAYMOND VENTURA
--------------------------------------
Name: RAYMOND VENTURA
Title: VICE PRESIDENT & MANAGER
NOMURA BANK INTERNATIONAL PLC, Bank
By S/P.G. ELLIOTT S/D.L.Stewart
--------------------------------------
Name: P.G. ELLIOTT D.L. Stewart
Title: SENIOR MANAGER DEPUTY GENERAL MANAGER
THE SANWA BANK LIMITED,
NEW YORK BRANCH, Bank
By S/PAUL JUDICKE
--------------------------------------
Name: PAUL JUDICKE
Title: VICE PRESIDENT
ING LEASE (IRELAND) B.V., Bank
By S/DOMINIC MCPARLAND
--------------------------------------
Name: DOMINIC MCPARLAND
Title: ATTORNEY-IN-FACT
THE BANK OF NEW YORK, Bank
By S/JUDITH TSE
--------------------------------------
Name: JUDITH TSE
Title: VICE PRESIDENT
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH, Bank
By S/JOHN V. VELTIN
--------------------------------------
Name: JOHN V. VELTIN
Title: DEPUTY GENERAL MANAGER
<PAGE>
EXHIBIT 1
=================================================================
FORM OF
ADMINISTRATIVE QUESTIONNAIRE
=================================================================
<PAGE>
=================================================================
OVERSEAS SHIPHOLDING GROUP, INC.
ADMINISTRATIVE DETAILS REPLY FORM
=================================================================
OSG
$600,000,000 Revolving Credit Facility
--------------------------------------
LEGAL NAME OF YOUR INSTITUTION TO APPEAR IN DOCUMENTATION:
- -----------------------------------------------------------------
GENERAL
INFORMATION
-----------
DOMESTIC LENDING OFFICE:
Institution Name: ------------------------------------------
Street Address: ------------------------------------------
City/State/Zip: ------------------------------------------
Attention: ------------------------------------------
Telephone #: ------------------------------------------
Fax #: ------------------------------------------
EURODOLLAR LENDING OFFICE:
Institution Name: ------------------------------------------
Street Address: ------------------------------------------
City/State/Zip: ------------------------------------------
Attention: ------------------------------------------
Telephone #: ------------------------------------------
Fax #: ------------------------------------------
CD LENDING OFFICE:
Institution Name: ------------------------------------------
Street Address: ------------------------------------------
City/State/Zip: ------------------------------------------
Attention: ------------------------------------------
Telephone #: ------------------------------------------
Fax #: ------------------------------------------
TAX WITHHOLDING:
Non-Resident Alien: --- yes* --- no (*Form 4224 Enclosed)
Tax ID Number: ----------------
Attn.: Loan Investor Services
<PAGE>
=================================================================
OVERSEAS SHIPHOLDING GROUP, INC.
ADMINISTRATIVE DETAILS REPLY FORM
=================================================================
OSG
$600,000,000 Revolving Credit Facility
--------------------------------------
CONTACT
LIST
-----
BUSINESS/CREDIT MATTERS:
Primary Contact: ------------------------------------------
Street Address: ------------------------------------------
City/State/Zip: ------------------------------------------
Telephone #: ------------------------------------------
Fax #: ------------------------------------------
Back-Up Contact: ------------------------------------------
Street Address: ------------------------------------------
City/State/Zip: ------------------------------------------
Telephone #: ------------------------------------------
Fax #: ------------------------------------------
ADMINISTRATIVE/OPERATIONS MATTERS:
Contact(s): ------------------------------------------
Street Address: ------------------------------------------
City/State/Zip: ------------------------------------------
Telephone #: ------------------------------------------
Fax #: ------------------------------------------
COMPETITIVE BID LOAN NOTIFICATION:
Contact Name: ------------------------------------------
Street Address: ------------------------------------------
City/State/Zip: ------------------------------------------
Telephone #: ------------------------------------------
Fax #: ------------------------------------------
<PAGE>
=================================================================
OVERSEAS SHIPHOLDING GROUP, INC.
ADMINISTRATIVE DETAILS REPLY FORM
=================================================================
OSG
$600,000,000 Revolving Credit Facility
--------------------------------------
ROUTING
INSTRUCTIONS
PAYMENTS:
Credit Bank: -----------------------------------------
City, State: -----------------------------------------
ABA # of
Credit Bank: -----------------------------------------
Name of Account: -----------------------------------------
Account #: -----------------------------------------
Benef. Acct. Name: -----------------------------------------
Benef Acct. # -----------------------------------------
Ref.: -----------------------------------------
Attention: -----------------------------------------
MAILINGS:
Please specify who should receive financial information:
Name: -----------------------------------------
Street Address: -----------------------------------------
City/State/Zip: -----------------------------------------
ADMINISTRATIVE AGENT
INFORMATION
-----------
Operations and Funding Contact:
Name: Matthew Carter
Tel: (718) 248-4478
Fax: (718) 248-4844
Initial Funding Standards
--------------------------
CD - Fund same day as rates LIBOR Fund 2 days after rates
are set are set.
Citibank Wire Instructions Citibank Notices Address
- -------------------------- ------------------------
Citibank, N.A. Matthew Carter
ABA # 021-00-0089 Citibank, N.A.
Account Name: NAIB Agency 1 Court Square/7th Floor, Zone 1
Medium Term Finance Long Island City, NY 11120
Reference:OSG
Account # 36852248
EXHIBIT 2
============================================================
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
between
[NAME OF ASSIGNOR]
and
[NAME OF ASSIGNEE]
============================================================
---------- ----, ----
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"),
dated as of , between [NAME OF ASSIGNOR], a
[bank]/[corporation] organized under the laws of [JURISDICTION OF
ASSIGNOR] (the "Assignor"), and [NAME OF ASSIGNEE], a
[bank]/[corporation] organized under the laws of [JURISDICTION OF
ASSIGNEE] (the "Assignee"), supplemental to:
(i) that certain Second Amended and Restated Credit
Agreement, dated as of August 19, 1997 (as amended,
restated, modified or supplemented from time to time, the
"Credit Agreement"), made among (a) Overseas Shipholding
Group, Inc., OSG Bulk Ships, Inc. and OSG International,
Inc., as borrowers ("Borrowers"), (b) the banks and
financial institutions parties thereto as lenders (the
"Banks"), including the Assignor, (c) The Chase Manhattan
Bank, as syndication agent, (d) Citibank, N.A., as
administrative agent (the "Administrative Agent"), and (e)
Morgan Guaranty Trust Company of New York, as documentation
agent, pursuant to which the Banks agreed, severally and not
jointly, to make available to the Borrowers a revolving
credit facility of up to $600,000,000 (the "Facility"); and
(ii) the promissory note made by each of the Borrowers
payable to the order of the Administrative Agent dated
August 19, 1997 (collectively, the "Notes") evidencing the
Advances.
Except as otherwise defined herein, terms defined in
the Credit Agreement have the same meaning when used herein.
In consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. The Assignor hereby sells, transfers and assigns
to the Assignee .% of the Assignor's right, title and interest
in, to and under the: (a) Credit Agreement and (b) Notes
(including, without limitation, its interest in the indebtedness
evidenced by the Notes). Simultaneously herewith, the Assignee
shall pay to the Assignor an amount equal to the purchase price
agreed between them in a separate writing.
2. The Assignee hereby assumes .% of the obligations
of the Assignor under the Credit Agreement and shall hereafter be
a "Bank" for all purposes of the Credit Agreement and the Notes,
the Assignee's Commitment thereunder being $. in respect of the
Facility.
3. The [Assignor][Assignee] shall pay an
administrative fee of Three Thousand Dollars ($3,000) to the
Administrative Agent to reimburse the Administrative Agent for
its cost in processing the assignment and assumption herein
contained.
4. If it is not a U.S. person, the Assignee shall, on
or prior to the date hereof and from time to time thereafter when
required by applicable provisions of the United States Internal
Revenue Code, provide the Borrower with two duly completed copies
of Internal Revenue Service Form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service,
certifying that the Assignee is entitled to benefits under an
income tax treaty to which the United States is a party that
exempts withholding tax on payments under the Credit Agreement
and the Note or certifying that the income receivable pursuant to
the Credit Agreement or the Notes is effectively connected with
the conduct of a trade or business in the United States.
5. The Assignee irrevocably designates and appoints
the Administrative Agent as its agent, and irrevocably authorizes
the Administrative Agent, to take such action on its behalf and
to exercise such powers on its behalf under the Credit Agreement
and under the Notes, each as supplemented hereby, as are
delegated to the Administrative Agent by the terms of each
thereof, together with such powers as are reasonably incidental
thereto all as provided in Section 15 of the Credit Agreement.
6. The Assignor makes no representation or warranty
in connection with, and shall have no responsibility with respect
to, the solvency, financial condition or statements of the
Borrowers, or the validity and enforceability of the obligations
of the Borrowers in respect of the Credit Agreement or the Notes.
The Assignee acknowledges that it has, independently and without
reliance on the Assignor or the Administrative Agent, and based
on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial
condition of the Borrowers.
7. Every notice or demand under this Agreement shall
be in writing and may be given by telecopy and shall be sent as
follows:
If to the Assignor:
[NAME OF ASSIGNOR]
[ADDRESS]
Telecopy No.:
Attention:
If to the Assignee
[NAME OF ASSIGNEE]
[ADDRESS]
Telecopy No.:
Attention:
Every notice or demand hereunder shall be deemed to have been
received at the time of receipt thereof. The Assignee designates
its address given above as its address for notices pursuant to
Section 16 of the Credit Agreement.
8. EACH OF THE ASSIGNOR AND THE ASSIGNEE, HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
9. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10. This Agreement may be executed in several
counterparts with the same effect as if the parties executing
such counterparts executed one agreement as of the date hereof
and each counterpart when executed and delivered shall be deemed
to be an original and all of such counterparts together shall
constitute this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
[NAME OF ASSIGNOR]
By
----------------------------
Name:
Title:
[NAME OF ASSIGNEE]
By
----------------------------
Name:
Title
Consented and Agreed this
day of , :
- --- --------- ----
OVERSEAS SHIPHOLDING GROUP, INC.
By
----------------------------
Name:
Title:
OSG BULK SHIPS, INC.
By
----------------------------
Name:
Title:
OSG INTERNATIONAL, INC.
By
----------------------------
Name:
Title:
EXHIBIT 3
============================================================
PROMISSORY NOTE
in favor of
CITIBANK, N.A.,
as Administrative Agent
============================================================
August 19, 1997
PROMISSORY NOTE
US $600,000,000 August 19, 1997
New York, New York
FOR VALUE RECEIVED, the undersigned, [INSERT NAME OF
BORROWER], a corporation incorporated under the laws of [INSERT
JURISDICTION OF INCORPORATION OF BORROWER] (the "Borrower")
hereby promises to pay to the order of CITIBANK, N.A., a national
banking association, in its capacity as administrative agent for
the Banks which are parties to the Credit Agreement (as defined
below), with offices at 399 Park Avenue, New York, New York, the
principal sum of Six Hundred Million United States Dollars (US
$600,000,000) or, if less, the aggregate unpaid principal amount
of the Advances from time to time outstanding made by the Banks
to the Borrower pursuant to the Credit Agreement. The Borrower
shall repay the principal amount of such Advances as provided in
Section 4 of the Credit Agreement, but in any event no later than
the Final Payment Date.
Words and expressions used herein (including those in
the foregoing paragraph) and defined in the Credit Agreement
shall have the same meaning herein as therein defined.
Each Advance shall bear interest at the rate as set
forth in Section 5.1 of the Credit Agreement. Any principal
payment not paid when due, whether by acceleration or otherwise,
shall bear interest thereafter at the Default Rate. All interest
shall accrue and be calculated on the actual number of days
elapsed and on the basis of a 360 day year with respect to each
LIBOR Rate Advance and on the basis of a 365/366 day year with
respect to each Base Rate Advance and be payable as provided in
the Credit Agreement.
Both principal and interest are payable in Dollars to
the Administrative Agent, at its office located at 399 Park
Avenue, New York, New York (or to such other branch of the
Administrative Agent as the Administrative Agent may direct).
The Administrative Agent may endorse the amount and the
date of the making of each Advance evidenced hereby and each
payment of principal hereunder on the grid annexed hereto and
made a part hereof, which endorsement shall constitute prima
facie evidence of the accuracy of the information so endorsed;
provided, however, that any failure to endorse such information
on such grid shall not in any manner affect the obligation of the
Borrower to make payment of principal and interest in accordance
with the terms of this Promissory Note.
If this Promissory Note or any payment required
hereunder becomes due and payable on a day which is not a Banking
Day the due date thereof shall be extended until the next
following Banking Day (in which event, interest shall be payable
during such extension at the rate applicable immediately prior
thereto), unless such next following Banking Day falls in the
following month in which case such payment shall be payable on
the Banking Day next preceding the day on which such payment
would otherwise be payable.
Amounts due hereunder may be prepaid in accordance with
the terms of the Credit Agreement.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, the Second Amended and Restated
Credit Agreement, dated as of August 19, 1997 (said Amended and
Restated Credit Agreement, as it may be amended, restated,
modified or supplemented from time to time, being herein called
the "Credit Agreement"), by and among the Borrower, [INSERT NAMES
OF OTHER BORROWERS], the Banks and the Agents. Upon the
occurrence of any Event of Default under the Credit Agreement,
the principal hereof and accrued interest hereon may become, or
may be declared to be and shall thereupon become, forthwith, due
and payable.
Presentment, demand, protest and notice of dishonor of
this Promissory Note and any other notice of any kind are hereby
expressly waived.
THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE
ADMINISTRATIVE AGENT ON BEHALF OF THE BANKS HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY
PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS PROMISSORY NOTE.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Promissory Note on the date and year first above
written.
[INSERT NAME OF BORROWER]
By
-------------------------------
Name:
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Unpaid Notation
Date Advance Paid or Principal Made by
Prepaid Balance
EXHIBIT 4
=================================================================
FORM OF
NOTICE OF CONVERSION OR CONTINUATION
=================================================================
<PAGE>
FORM OF CONTINUATION/CONVERSION NOTICE
Citibank, N.A., as Administrative Agent
399 Park Avenue
New York, New York 10043
Attention: Mr. Paul Griffith
Vice President
Re: OVERSEAS SHIPHOLDING GROUP, INC.
Ladies and Gentlemen:
This Continuation/Conversion Notice is delivered to you
pursuant to Section 4.3 of the Second Amended and Restated Credit
Agreement, dated as of August 19, 1997 (as amended, supplemented,
restated or otherwise modified, the "Credit Agreement"), between
Overseas Shipholding Group, Inc., OSG Bulk Ships, Inc. and OSG
International, Inc. (the "Borrowers"), the banks named therein
and you, as administrative agent for such banks. Unless
otherwise defined herein or the context otherwise requires, terms
used herein have the meanings provided in the Credit Agreement.
The Borrowers hereby request that on ,
19 ,
(1) $ of the presently outstanding
principal amount of the Advances originally made on
, 19 [and $ of the presently
outstanding principal amount of the Advances originally
made on , 19 ], currently being maintained as
[Base Rate Advances] [LIBOR Rate Advances],
(2) be [converted into] [continued as],
(3) [Base Rate Advances] [LIBOR Rate Advances
having an Interest Period of months].
The Borrowers hereby:
(a) certify and warrant that no Event of Default
has occurred and is continuing; and
(b) agree that if, prior to the time of such
continuation or conversion, any matter certified to
herein by them will not be true and correct in all
material respects at such time as if then made, they
will immediately so notify you. Except to the extent
that prior to the time of the continuation or
conversion requested hereby you shall receive written
notice to the contrary from the Borrowers, each matter
certified to herein shall be deemed to be certified at
the date of such continuation or conversion.
IN WITNESS WHEREOF, the Borrowers have caused this
Continuation/Conversion Notice to be executed and delivered, and
the certification and warranties contained herein to be made, by
their undersigned officers this day of , 19 .
OVERSEAS SHIPHOLDING GROUP, INC.
By
------------------------------------
Name:
Title:
[OSG BULK SHIPS, INC.
By
------------------------------------
Name:
Title:
OR
OSG INTERNATIONAL, INC.
By
------------------------------------
Name:
Title:]
EXHIBIT 5
<PAGE>
================================================================
FORM OF
DRAWDOWN NOTICE
================================================================
DRAWDOWN NOTICE
---------------
-------- --, ----
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attn: Paul Griffith
Dear Sirs:
Please be advised that, in accordance with the terms of
Section 2.2 of the Second Amended and Restated Credit Agreement
among Overseas Shipholding Group, Inc., OSG Bulk Ships, Inc. and
OSG International, Inc., as borrowers (the "Borrowers"), the
financial institutions listed on Schedule 1 thereto, as lenders,
The Chase Manhattan Bank, as syndication agent, Citibank, N.A. as
administrative agent, and Morgan Guaranty Trust Company of New
York, as documentation agent (the "Credit Agreement"), the
undersigned hereby gives you notice of drawdown of an Advance.
All terms used herein, shall have the meanings given thereto in
the Credit Agreement.
Name(s) of Borrower(s)
(and allocation if more
than one Borrower): --------
-------
Amount of Advance: US$-----
-------
Drawdown Date: August ,
1997
Type of Advance: [Base
Rate Advance/LIBOR Rate
Advance]
Initial Interest Period:
[1/2/3/6 month(s)]
Disbursement Instructions:
-----------------------
-----------------------
-----------------------
COFR Advance: [Yes/No]
We hereby warrant that the representations and
warranties stated in Section 7 (updated mutatis mutandis) of the
Credit Agreement are true and correct on the date hereof and will
be true and correct on the date that the Advance requested by
this drawdown notice is made1 and that no Event of Default (as
such term is defined in the Credit Agreement) nor any event
which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default has occurred and is continuing.
In the event that the Banks shall not be obliged under
the terms of the Credit Agreement to make the above requested
Advance (including, without limitation any such failure resulting
from the failure of the Borrowers to satisfy a condition
precedent set forth in Section 3 of the Credit Agreement),2 the
Borrowers shall indemnify and hold the Banks, or any of them,
fully harmless against any losses, which the Banks, or any of
them, may sustain as a result of borrowing or agreeing to borrow
funds to meet the drawdown requirement in respect thereof and the
certificate of such Bank or Banks shall, absent manifest error,
be conclusive and binding on the Borrowers as to the extent of
any such losses.
This Drawdown Notice is effective upon receipt by you
and shall be irrevocable.
OVERSEAS SHIPHOLDING GROUP, INC.
By -----------------------------
Name:
Title:
OSG BULK SHIPS, INC.
By -----------------------------
Name:
Title:
OSG INTERNATIONAL, INC.
By -----------------------------
Name:
Title:
1 [Insert the following if the Advance would not result in an
incremental increase in the aggregate amount of Advances
outstanding under the Facility and such Advance is to be made
after the initial Drawdown Date -- "provided, however that (i)
the representations and warranties set forth in Section 7.1(e)
and (o) of the Credit Agreement shall be deemed inapplicable as
of the date hereof and as of the date of the Advance and (ii) any
representation and warranty which relates solely to an earlier
date shall be true and accurate on and as of such earlier date".
2 [Insert the following in the initial Drawdown Notice -- "or
the failure of the Credit Agreement to become effective".
<PAGE>
SCHEDULE 1
BANKS
Name of Bank and Address
Commitment
- ------------------------ -----------
The Chase Manhattan Bank $62,500,000
270 Park Avenue
New York, New York 10017
Attention: Mr. James B. Treger
(212) 270-5100 (Facsimile)
Citibank, N.A. $62,500,000
399 Park Avenue
New York, New York 10043
Attention: Mr. Paul Griffith
(212) 793-3588 (Facsimile)
Morgan Guaranty and Trust Company $62,500,000
of New York
60 Wall Street
New York, New York 10260-0060
Attention: Ms. Jeannie Mattson
(302) 634-1092 (Facsimile)
Landesbank Schleswig-Holstein
Gironzentrale $35,000,000
Martensdamm 6
D-24103 Kiel
Attention: Dork Berkenbusch
+431-900-1130 (Facsimile)
Skandinaviska Enskilda Banken
$35,000,000
2 Cannon Street
London EC4M 6XX
Attention: Mr. Scott Lewallen
011-44-171-236-5144 (Facsimile)
Credit Lyonnais New York Branch $35,000,000
1301 Avenues of the Americas
New York, New York 10019-6022
Attention: Mr. Bertrand Cousin
(212) 261-7368 (Facsimile)
The Bank of Nova Scotia
$35,000,000
One Liberty Plaza
New York, New York 10583
Attention: Sharon Casagrande
(212) 225-5145 (Facsimile)
Royal Bank of Canada $35,000,000
One Financial Square
New York, New York 10005-3531
Attention: Michael J. Madnick
(212) 428-6459
Christiania Bank og Kreditkasse ASA $35,000,000
11 West 42nd Street - 7th Floor
New York, New York 10036
Attention: Mr. Knut Hatleskog
(212) 827-4888 (Facsimile)
CIBC, Inc. $35,000,000
425 Lexington Avenue
New York, New York 10017
Attention: Ms. Judy Domkowski
(212) 856-3991 (Facsimile)
The Long-Term Credit Bank of Japan,
Limited, $26,250,000
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Naoyoshi Kasuga
(212) 608-2371 (Facsimile)
Bank of Tokyo-Mitsubishi Trust Company $26,250,000
1251 Avenue of the Americas
New York, New York 10020-1104
Attention: Ms. Paula Mueller
(212) 782-6445 (Facsimile)
The Fuji Bank, Limited, New York Branch $20,000,000
Two World Trade Center
New York, New York 10048
Attention: Chigusa Tada
(212) 912-0516 (Facsimile)
Nomura Bank International plc $20,000,000
1 St. Martin's-le-Grand
London EC1A 4NP
Attention: Mr. Paul Barnes
+44-171-626-0851 (Facsimile)
The Sanwa Bank Limited $20,000,000
55 E. 52nd Street
New York, New York 10055
Attention: Ms. Renko Hara
(212) 754-2368 (Facsimile)
ING Lease (Ireland) B.V. $20,000,000
49 St. Stephens Green
Dublin 2 Ireland
Attention: Ruth Kiernan
011-353-1-6622240 (Facsimile)
The Bank of New York $20,000,000
One Wall Street, 16 - N
New York, New York 10286
Attention: Ms. Judith B. Tse
(212) 635-7512 (Facsimile)
The Industrial Bank of Japan, Limited, $15,000,000
New York Branch
1251 Avenue of the Americas
New York, New York 10020
Attention: Mr. Mark O'Connor
(212) 282-4488 (Facsimile)
<PAGE>
SCHEDULE 2
APPLICABLE MARGIN
Rating Level (1), (2) Interest Rate Commitment Fee
(S&P/Moody's) (LIBOR +)
- --------------------- ---------------- ------------------
BBB+/Baa1 37.5 bps 12.5 bps
BBB/Baa2 42.5 bps 15 bps
BBB-/Baa3 50 bps 17.5 bps
BB+/Ba1 70 bps 22.5 bps
BB/Ba2 97.5 bps 27.5 bps
- ----------
(1) If there is a split between the S&P and Moody's ratings,
then the higher rating level shall be used for purposes of
determining the applicable Interest Rate and Commitment Fee.
(2) If there is a split between the S&P and Moody's ratings
which is greater than one (1) level, then a rating equal to
one lower than the highest rating level shall be used.
<PAGE>
<TABLE>
SCHEDULE 3
FUNDED DEBT AT MARCH 31, 1997
<CAPTION>
LONG TERM DEBT IN THOUSANDS AT MARCH 31, 1997
---------------------------------------------
<S> <C>
Unsecured Senior Notes, due from 2000 through
2013, interest from 7.77% to 9.75% $310,000
Unsecured Revolving Credit Agreement with Banks 470,000
8.75% Debentures due 2013, net of unamortized
discount of $268 99,732
8% Notes due 2003, net of unamortized discount of
$161 99,839
Floating rate secured Term Loan, due through 2005 80,782
8% to 10.58% secured Promissory Notes and Term
Loans due through 2001 18,780
10.58% secured Promissory Notes and Term Loans
due through 2001 6,101
8.45% United States Government Guaranteed
Merchant Marine Bonds due through 2006 $ 8,215
----------
Total Long Term Debt $1,093,449
Obligations under Capital Leases 107,999
----------
Funded Debt $1,201,448
----------
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 12
----------
OVERSEAS SHIPHOLDING GROUP, INC.
RATIO OF EARNINGS TO FIXED CHARGES
For the nine months ended September 30, 1997
(In thousands)
Presented in connection with Amendment No. 1
filed on November 9, 1993 to Registration Statement No. 33-50441
<S> <C>
Income before Federal income taxes $ 23,070
Adjustments of income related to
companies owned less than 100% (3,356)
Interest expense 62,858
Proportionate share of interest of
50% - owned companies 16,991
Interest component of an operating
lease 933
Amortization of capitalized interest 2,876
--------
Earnings $103,372
========
Interest expense $ 62,858
Proportionate share of fixed charges
of 50% - owned companies 17,902
Capitalized interest 1,326
Interest component of an operating
lease 933
--------
Fixed charges $ 83,019
========
Ratio of earnings to fixed charges 1.25X
======
</TABLE>
EXHIBIT 15
----------
November 10, 1997
To the Shareholders
Overseas Shipholding Group, Inc.
We are aware of the incorporation by reference in the Registration
Statements (Form S-8 No. 33-44013 and Form S-3 No. 33-50441) of
Overseas Shipholding Group, Inc. of our report dated November 10,
1997 relating to the unaudited condensed consolidated interim
financial statements of Overseas Shipholding Group, Inc. which are
included in its Form 10-Q for the quarter ended September 30, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is
not part of the registration statement prepared or certified by
accountants within the meaning of Section 7 or 11 of the Securities
Act of 1933.
ERNST & YOUNG LLP
New York, New York
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 110,337
<SECURITIES> 26,504
<RECEIVABLES> 33,648
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 169,340
<PP&E> 1,868,265
<DEPRECIATION> 554,252
<TOTAL-ASSETS> 2,026,908
<CURRENT-LIABILITIES> 85,789
<BONDS> 1,046,805
<COMMON> 39,591
0
0
<OTHER-SE> 745,466
<TOTAL-LIABILITY-AND-EQUITY> 2,026,908
<SALES> 0
<TOTAL-REVENUES> 436,547
<CGS> 0
<TOTAL-COSTS> 350,619
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,858
<INCOME-PRETAX> 23,070
<INCOME-TAX> 8,750
<INCOME-CONTINUING> 14,320
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,320
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.39
</TABLE>
